Minimum wage as a safety net: what 946 euros gross actually leaves you with
On 2 October 2026, ERR published an opinion piece by Elle Pütsepp, a board member of the Estonian Trade Union of Service and Retail Workers, arguing that the minimum wage is an important safeguard against poverty for low-income workers. The piece matters to anyone earning close to the minimum wage or working in retail, food service, or accommodation.
What happened and when: the union's position
ERR published Elle Pütsepp's opinion piece on 2 October 2026, in which she points out that a minimum-wage worker has roughly 865 euros in their bank account on payday, and that this is their entire income after a full month of full-time work. Pütsepp notes that the average gross monthly salary in the accommodation and food service sector was 1,389 euros in the second quarter of 2026, while Estonia's average gross monthly salary stood at 2,243 euros, meaning the sector earns just over 60 percent of the national average.
The article also highlights that negotiations between social partners over next year's minimum wage are about to begin, and that back in 2023 a target was set to raise the minimum wage to 50 percent of Estonia's average salary by 2028.
What 946 euros gross actually means
Since 1 April 2026, the minimum wage has been 946 euros a month, or 5.67 euros an hour, up from 886 euros in 2025. Taking into account the 700-euro tax-free income threshold and a 2 percent second-pillar pension contribution, the net pay from this gross amount comes to 865.31 euros a month. Income tax amounts to 46.63 euros, the unemployment insurance contribution is 15.14 euros, and the pension contribution is 18.92 euros.
For the employer, however, raising the minimum wage is not a cost-free move. With a gross salary of 946 euros, the employer's actual total cost (including 33 percent social tax and 0.8 percent unemployment insurance) comes to 1,265.75 euros a month. This means that for every minimum-wage employee, a company pays nearly 320 euros more per month than the worker actually receives.
A worked example using a salary calculator
Suppose an average-wage worker earns 2,243 euros gross, matching Estonia's average gross monthly salary for the second quarter of 2026 cited in the ERR article. While no exact calculation is given for this specific amount, the closest comparable example, a gross salary of 2,000 euros, shows a net pay of 1,657.84 euros a month, income tax of 270.16 euros, and a total employer cost of 2,676 euros.
If you want to compare your own gross salary with what you'd actually take home, you can use a salary calculator that accounts for the tax-free income threshold, the unemployment insurance contribution, and the second-pillar pension rate. For employers wanting to see the real cost, an employer cost calculator shows exactly how much a payroll actually costs the company.
Why 865 euros is the critical floor
The core message of Pütsepp's piece is that 865 euros in take-home pay is the entire income of a full-time worker with no other sources of earnings. According to the statistics cited in the article, 7.9 percent of employees and 10.1 percent of employed people lived in relative poverty in 2024, with the share even higher among single-person households (44.8 percent) and single-parent families (37.9 percent).
The article emphasizes that the risk of in-work poverty depends not only on the size of the gross salary but also on household composition, housing costs, and available benefits. This means the same 946-euro gross salary can be enough to get by for one person, while causing serious financial strain for another, depending on how many children or other dependents are in the household.
What the tax reform gave minimum-wage earners
The comparison presented in the article shows that, compared with the 2025 tax system, a worker earning 946 euros gross saw their net income rise by roughly ten euros a month. By contrast, for a gross salary of 2,243 euros, the tax reform's effect was 154 euros a month (with a 2 percent second-pillar contribution), a considerably larger gain than for the low-wage worker.
This gap arises because the flat 700-euro tax-free threshold has a proportionally bigger impact on higher salaries, whereas for lower earners the tax-free amount already makes up a large share of total income. According to Pütsepp, this means it cannot be claimed that the tax reform has made the current minimum wage adequate.
What happens next: negotiations over next year's minimum wage
According to the article, negotiations over next year's minimum wage between the trade unions and the employers' confederation are set to begin soon, taking into account factors such as the Bank of Estonia's autumn economic forecast and labour market conditions. The final decision will only emerge from these negotiations, but the stated goal is to bring the minimum wage up to 50 percent of Estonia's average salary by 2028.
Workers earning close to the minimum wage would do well to keep an eye on how future changes affect their net income. Since the tax-free threshold and the minimum wage change through separate processes, it's worth periodically checking your specific situation with a salary calculator, especially if the minimum wage rises again next year.
Source: ERR, Elle Pütsepp: miinimumpalk on madala palgaga töötaja jaoks oluline kaitse (2026-10-02)
Try the calculators
Read more in the guides
More posts
- Prices rose 3% year on year in September: fuel driving inflation
- Experts expect Tallinn apartment prices to rise: what it means for buyers
- Heating prices set to rise this winter: gas customers could see bills jump by up to 40%
- Apartment building renovation grants shrink to 20 percent: what it means for housing associations