The start of a new year brings salary negotiations for many employees and the hope that income will grow at least in line with prices. After the rapid inflation of recent years, salary growth has once again become one of the key economic topics — both in Estonia and across Europe.

Salary growth in Europe: recovery after high inflation

European salary trends show that real wages in the euro area have largely recovered from the decline caused by high inflation in 2022. According to the European Central Bank, real wages in early 2025 were already close to the levels seen before the price increases that began at the end of 2021. International analyses also suggest that moderate wage growth is likely to continue in 2026, although the pace will vary by country.

What can be expected in Estonia?

In Estonia, salary growth has been closely linked to inflation. According to a labor market survey by Palgainfo Agentuur and CVKeskus.ee, nearly half of employers plan to increase employees’ base salaries at the beginning of the new year. Most raises fall in the range of 3–6% and usually take effect in January.

Economic experts say that wage pressure on companies remains high. Many emphasize that salary growth should at least match inflation — otherwise, people’s real incomes will decline. Forecasts suggest inflation in the new year will be around 3.5–5%, and average salary growth is expected to be in a similar range.

The public sector leads, the private sector follows

The public sector plays an important role in driving salary growth. It is already known that in several areas — such as education and emergency services — pay rises have been approved, and personnel costs in the state budget will increase significantly. This, in turn, puts pressure on the private sector, which must adjust wages to remain competitive.

However, the situation varies between companies. Larger organizations tend to raise salaries more often and by larger amounts, while small businesses offer more modest increases or postpone them.

What does a salary increase depend on?

According to employers, wage plans are mainly influenced by the company’s financial performance, the labor market situation, and competitors’ salary levels. Changes in workload, employee development, and the overall economic outlook also play a role. Although economic growth forecasts differ, the general expectation is that salaries will not decrease in the new year.

How does salary growth affect everyday life?

Although a pay rise offers some relief, it may not always cover all rising costs. Housing, services, and daily expenses can increase faster than income. In such situations, it is important to plan your finances carefully and, if necessary, use flexible financial solutions.

If major expenses are coming up — such as home renovations, buying a car, or unexpected costs — a consumer loan or small loan from laen.ee can help. These options allow you to spread expenses over time and keep your daily budget balanced, even if your salary increase does not fully cover rising prices.