Booming domestic demand and capacity constraints supported an unsustainable rise in unit labour costs, with a cumulative increase of over 50% during the period from 2000 to 2007. The strong increase in wages outpaced productivity gains and had a negative impact on the competitiveness of the economy.
Today, as we look forward to the introduction of the euro in Estonia, I would like to point out two key aspects of the country’s experience on its road to adopting the euro.