The Estonian government has an obligation to promote collective bargaining

The European Court of Justice’s ruling reinforces the European social model, according to which the minimum wage must allow for a decent life and cover the largest possible number of workers through collective bargaining. Estonia now has an obligation to draw up a substantive action plan to increase coverage by collective agreements. This is no longer a political choice but an obligation under EU law.

The Danish dispute over the directive before the European Court of Justice has reached a point where the argument that the minimum wage is a matter for each country to decide has been rejected. However, the Court found that the directive does not oblige countries to set a specific minimum wage, but rather creates a common framework to increase workers’ incomes and improve their social protection.

The directive, adopted three years ago, stipulates that the minimum wage should be at least 50 percent of the average wage or 60 percent of the median wage and that the proportion of workers covered by a collective agreement must be increased to at least 80 percent. Collective agreements are concluded between employers and trade unions.

Workers must raise the minimum wage to a decent level

While the court removed the technical provision from the directive setting out the criteria for assessing the minimum wage, the principles linking the minimum wage to a decent standard of living remained in place. They will remain a guide for countries in setting fairer wage levels.

Kaia Vask, head of the Estonian Trade Union Confederation, said that today’s decision confirms the fundamentals of the European Union’s social policy: “Every worker has the right to a decent average wage and the European Court’s decision shows that the minimum wage is built on a solid foundation and Estonia must move towards the further goal of achieving the minimum wage by 2023 at least in a tripartite way – by employers, the state and trade unions. Workers need both a real wage increase and the security guaranteed by collective agreements.”

Estonia must support trade union activities and the conclusion of more collective agreements

An adequate EU minimum wage obliges countries to promote social dialogue between trade unions and employers. In Estonia, the coverage of collective agreements is below 80%, which means that the state is obliged to create an action plan to promote collective bargaining. However, the action plan prepared by the Ministry of Economic Affairs and Communications at the end of September focuses on technical issues, such as updating databases or informing upper secondary school students. The action plan does not include practical activities that support employers and trade unions in concluding collective agreements.

According to the Trade Union Confederation, a new action plan must be prepared that also supports collective bargaining in practice.

The next round of minimum wage negotiations in Estonia will take place at the end of November

The next meeting of the Estonian Trade Union Confederation and the Estonian Employers’ Confederation to discuss the minimum wage for 2026 will take place on 24 November at the Trade Union House in Tallinn. The negotiations are based on a goodwill agreement concluded between the state, employers and the Estonian Trade Union Confederation in 2023. The current government, led by Minister of Economic Affairs and Industry Erkki Keldo, has withdrawn from the goodwill agreement.

This year, the minimum wage paid to a full-time employee in Estonia is 886 euros per month.