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Future labour markets in the Baltic states Raul Eamets University of Tartu NFS Decent Work Conference 6 - 7 October 2016
Some general trends
Employment rate 78
76
74
72
70
68
66
64
62
60 2001
2002
2003
2004
2005
2006
2007
European Union (28 countries)
2008
Estonia
2009
2010
Latvia
2011
2012
Lithuania
2013
2014
2015
Unemployment rate 25
20
15
10
05
00 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
Lithuania
2013
2014
2015
Youth unemployment 40
35
30
25
20
15
10
05 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
2013
Lithuania
2014
2015
NEET 20
18
16
14
12
10
08
06 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
Lithuania
2013
2014
2015
Part time work 21
19
17
15
13
11
09
07
05 2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
2010
Estonia
2011
Latvia
2012
2013
Lithuania
2014
2015
Temporary contracts 12
10
08
06
04
02
00 2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
2010
Estonia
2011
Latvia
2012
2013
Lithuania
2014
2015
Population change in Baltics (2000-2011) Lithuania, 3 480 000- 440 000 = 3 040 000 ↓12,6%; ~300 000 emigrated Latvia 2 377 000- 291 000 = 2 086 000 ↓12,2% ; 190 000 emigrated Estonia 1 340 000 – 75 000 = 1 265 000 ↓5,6% 43 000 emigrated
Labour market flexibility in Baltics What happen during the last crises?
Employment changes during the crises: construction was most affected
Table 11. Annual wage changes in the Baltic States by economic sector Industry
Estonia
Latvia
Lithuania
2008
2009
2008
2009
2008
2009
Total economy
13.8%
-4.6%
20.6%
-4.0%
19%
-4%
Primary
17.7%
-7.4%
17.2%
-4.6%
23%
-8%
Industry
11.5%
-3.5%
13.4%
-4.0%
18%
-4%
Manufacturing
10.8%
-3.9%
19.8%
-2.1%
18%
-4%
Energy
17.0%
6.8%
5.6%
-5.0%
16%
0%
Construction
8.3%
-13.4%
19.0%
-1.1%
10%
-21%
Business services
12.3%
-4.2%
21.0%
-1.8%
19%
-5%
Public services
17.4%
-4.5%
20.2%
-9.7%
22%
-11%
15.7%
-7.6%
16.1%
-18.0%
23%
-10%
Education 20.4% -2.5% 23.4% -9.9% Source: national statistical offices of Estonia, Latvia, Lithuania
26%
8%
Public administration
1-q-14
4-q-13
3-q-13
2-q-13
1-q-13
4-q-12
3-q-12
2-q-12
1-q-12
4-q-11
3-q-11
2-q-11
1-q-11
4-q-10
3-q-10
2-q-10
1-q-10
4-q-09
3-q-09
2-q-09
1-q-09
4-q-08
3-q-08
2-q-08
Wage flexibility in Estonia
135
125
115 Total awerage
105 Manufacturing
Trade
Transportation
95 Public administration
Construction
85
75
Total
European Union (27 countries)
Hotels and catering
0
0
2009
2010
2011
2012
-0,5 -1
2010
2011
2012
-2
European Union (27 countries)
-4
Euro area (17 countries)
Germany
-1,5 Estonia
-2
Working time flexibility
2009
Euro area (17 countries)
Germany
-6
-2,5 Latvia
-3
Estonia
-8
-3,5
Lithuania
Latvia
-10
-4
Lithuania
-4,5
-12
Public administration
Construction European Union (27 countries)
3 2,5
Euro area (17 countries)
2 1,5
Germany
Estonia
0,5 0
-1 -1,5
2009
2010
2011
2012
Latvia
European Union (27 countries)
1 0 2009 -1 -2
1
-0,5
2
-3
2010
2011
2012
Euro area (17 countries) Germany
Estonia
-4 Latvia
-5 Lithuania
-6 -7
Lithuania
Future • Ageing and increasing cost of social welfare system • Negative net migration • Declining population • Low productivity • Small country, vulnerability
Solutions • Productivity increase, higher position in value chain • Training, retraining • Reduction of unemployment and inactivity • Increasing birth rate ? • Migration
Migration impact to destinaton country (1) Positive aspects + Increasing domestic demand + More opportunities for consumers: increasing variety of goods and services + Job creation, new talents + 3D (dirty, dangerous, difficult) jobs + More flexible labour force +/- Low skill versus high skill workers: effects on employment and wages
Low skill and high skill effects W
S S`
W1* W* D` WM D
U Ld
L*
Lm
L*1
L
Migration impact to destinaton country (2) Negative aspects
Cheap and flexible labour: gain in short run, loss in long run, competitiveness issues Social dumping and hidden labour market Social problems, high unemployment among immigrants, slums in big cities
No incentives to improve working conditions Negative effect on native wages?? Source: Human Migration ,Issue 7, January 2009
Global trends and future jobs
Global Trends • Extreme longevity: increasing global lifespans change the nature of careers and learning • Rise of smart machines and systems: workplace automatisation • Computational world: Big data analyses, increase in sensors and processing power • New media ecology: new communication tools require new media literacies • Superstructured organisations: Social technologies drive new forms of production and value creation • Globally connected world: Increased global interconnectivity, diversity and adaptability Source: Future Work Skills 2020 (http://www.iftf.org/uploads/media/SR-1382A_UPRI_future_work_skills_sm.pdf )
Trends shaping the future of jobs and skills • Emerging economies acquiring shares in global production chains; • Demographic change and migration changing the face of the workforce; • Technological developments weakening the once clear differentiation of sectors and traditional modes of working; • The structure of businesses evolving and developing into more flexible and networked models; • Employees becoming more mobile (through preference or necessity) leading to higher job turnover rates.
Potential disruptions • Reverse migration • Changing values of employees’, where workers select employers on the basis of alignment with their own values • Zero-hour contracts, and similar flexible arrangements, become the norm • Anytime, anywhere skills delivery, enabled by virtual and peer-to-peer learning • Artificial intelligence (AI) and robots, penetration of AI and automation into highly skilled occupations
Potential disruptions (cont.) • De-globalisation • Geographically alternative centres of excellence, the Europe’s leading position in key economic sectors is lost to high growth economies • Disrupted Internet developments due to cyber crime • Resource conflicts or climate disasters threaten supply • Partial fragmentation of the EU.
Future jobs
Jobs that robots will not take over
Teachers Police Managers Personal services
Jobs which most probably disappear • Translators • Data analyses (simple ones), accountants • Drivers • Different type of brokers, mediators (shared economy) • Assembly line workers • Cleaning workers
Conclusions • Unions should reshape their activities, how to find new members if the essence of work will change • Baltic countries will be in the future destination countries for migration • Some future changes in labour market we can anticipate, some not • Advantage of cheap labour will disappear in Baltics, convergence with Scandinavia
Thank You!
For further reading • Future Work Skills 2020 http://www.iftf.org/futureworkskills/ • The Future of Work: Jobs and skills in 2030 , UK Report https://www.gov.uk/government/uploads/system/uploads/attachment_da ta/file/303334/er84-the-future-of-work-evidence-report.pdf • C. Anderson, J. F. Gantz SKILLS REQUIREMENTS FOR TOMORROW'S BEST JOBS https://news.microsoft.com/download/presskits/education/docs/IDC_101 513.pdf
Some general trends
Employment rate 78
76
74
72
70
68
66
64
62
60 2001
2002
2003
2004
2005
2006
2007
European Union (28 countries)
2008
Estonia
2009
2010
Latvia
2011
2012
Lithuania
2013
2014
2015
Unemployment rate 25
20
15
10
05
00 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
Lithuania
2013
2014
2015
Youth unemployment 40
35
30
25
20
15
10
05 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
2013
Lithuania
2014
2015
NEET 20
18
16
14
12
10
08
06 2002
2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
Estonia
2010
2011
Latvia
2012
Lithuania
2013
2014
2015
Part time work 21
19
17
15
13
11
09
07
05 2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
2010
Estonia
2011
Latvia
2012
2013
Lithuania
2014
2015
Temporary contracts 12
10
08
06
04
02
00 2003
2004
2005
2006
2007
2008
European Union (28 countries)
2009
2010
Estonia
2011
Latvia
2012
2013
Lithuania
2014
2015
Population change in Baltics (2000-2011) Lithuania, 3 480 000- 440 000 = 3 040 000 ↓12,6%; ~300 000 emigrated Latvia 2 377 000- 291 000 = 2 086 000 ↓12,2% ; 190 000 emigrated Estonia 1 340 000 – 75 000 = 1 265 000 ↓5,6% 43 000 emigrated
Labour market flexibility in Baltics What happen during the last crises?
Employment changes during the crises: construction was most affected
Table 11. Annual wage changes in the Baltic States by economic sector Industry
Estonia
Latvia
Lithuania
2008
2009
2008
2009
2008
2009
Total economy
13.8%
-4.6%
20.6%
-4.0%
19%
-4%
Primary
17.7%
-7.4%
17.2%
-4.6%
23%
-8%
Industry
11.5%
-3.5%
13.4%
-4.0%
18%
-4%
Manufacturing
10.8%
-3.9%
19.8%
-2.1%
18%
-4%
Energy
17.0%
6.8%
5.6%
-5.0%
16%
0%
Construction
8.3%
-13.4%
19.0%
-1.1%
10%
-21%
Business services
12.3%
-4.2%
21.0%
-1.8%
19%
-5%
Public services
17.4%
-4.5%
20.2%
-9.7%
22%
-11%
15.7%
-7.6%
16.1%
-18.0%
23%
-10%
Education 20.4% -2.5% 23.4% -9.9% Source: national statistical offices of Estonia, Latvia, Lithuania
26%
8%
Public administration
1-q-14
4-q-13
3-q-13
2-q-13
1-q-13
4-q-12
3-q-12
2-q-12
1-q-12
4-q-11
3-q-11
2-q-11
1-q-11
4-q-10
3-q-10
2-q-10
1-q-10
4-q-09
3-q-09
2-q-09
1-q-09
4-q-08
3-q-08
2-q-08
Wage flexibility in Estonia
135
125
115 Total awerage
105 Manufacturing
Trade
Transportation
95 Public administration
Construction
85
75
Total
European Union (27 countries)
Hotels and catering
0
0
2009
2010
2011
2012
-0,5 -1
2010
2011
2012
-2
European Union (27 countries)
-4
Euro area (17 countries)
Germany
-1,5 Estonia
-2
Working time flexibility
2009
Euro area (17 countries)
Germany
-6
-2,5 Latvia
-3
Estonia
-8
-3,5
Lithuania
Latvia
-10
-4
Lithuania
-4,5
-12
Public administration
Construction European Union (27 countries)
3 2,5
Euro area (17 countries)
2 1,5
Germany
Estonia
0,5 0
-1 -1,5
2009
2010
2011
2012
Latvia
European Union (27 countries)
1 0 2009 -1 -2
1
-0,5
2
-3
2010
2011
2012
Euro area (17 countries) Germany
Estonia
-4 Latvia
-5 Lithuania
-6 -7
Lithuania
Future • Ageing and increasing cost of social welfare system • Negative net migration • Declining population • Low productivity • Small country, vulnerability
Solutions • Productivity increase, higher position in value chain • Training, retraining • Reduction of unemployment and inactivity • Increasing birth rate ? • Migration
Migration impact to destinaton country (1) Positive aspects + Increasing domestic demand + More opportunities for consumers: increasing variety of goods and services + Job creation, new talents + 3D (dirty, dangerous, difficult) jobs + More flexible labour force +/- Low skill versus high skill workers: effects on employment and wages
Low skill and high skill effects W
S S`
W1* W* D` WM D
U Ld
L*
Lm
L*1
L
Migration impact to destinaton country (2) Negative aspects
Cheap and flexible labour: gain in short run, loss in long run, competitiveness issues Social dumping and hidden labour market Social problems, high unemployment among immigrants, slums in big cities
No incentives to improve working conditions Negative effect on native wages?? Source: Human Migration ,Issue 7, January 2009
Global trends and future jobs
Global Trends • Extreme longevity: increasing global lifespans change the nature of careers and learning • Rise of smart machines and systems: workplace automatisation • Computational world: Big data analyses, increase in sensors and processing power • New media ecology: new communication tools require new media literacies • Superstructured organisations: Social technologies drive new forms of production and value creation • Globally connected world: Increased global interconnectivity, diversity and adaptability Source: Future Work Skills 2020 (http://www.iftf.org/uploads/media/SR-1382A_UPRI_future_work_skills_sm.pdf )
Trends shaping the future of jobs and skills • Emerging economies acquiring shares in global production chains; • Demographic change and migration changing the face of the workforce; • Technological developments weakening the once clear differentiation of sectors and traditional modes of working; • The structure of businesses evolving and developing into more flexible and networked models; • Employees becoming more mobile (through preference or necessity) leading to higher job turnover rates.
Potential disruptions • Reverse migration • Changing values of employees’, where workers select employers on the basis of alignment with their own values • Zero-hour contracts, and similar flexible arrangements, become the norm • Anytime, anywhere skills delivery, enabled by virtual and peer-to-peer learning • Artificial intelligence (AI) and robots, penetration of AI and automation into highly skilled occupations
Potential disruptions (cont.) • De-globalisation • Geographically alternative centres of excellence, the Europe’s leading position in key economic sectors is lost to high growth economies • Disrupted Internet developments due to cyber crime • Resource conflicts or climate disasters threaten supply • Partial fragmentation of the EU.
Future jobs
Jobs that robots will not take over
Teachers Police Managers Personal services
Jobs which most probably disappear • Translators • Data analyses (simple ones), accountants • Drivers • Different type of brokers, mediators (shared economy) • Assembly line workers • Cleaning workers
Conclusions • Unions should reshape their activities, how to find new members if the essence of work will change • Baltic countries will be in the future destination countries for migration • Some future changes in labour market we can anticipate, some not • Advantage of cheap labour will disappear in Baltics, convergence with Scandinavia
Thank You!
For further reading • Future Work Skills 2020 http://www.iftf.org/futureworkskills/ • The Future of Work: Jobs and skills in 2030 , UK Report https://www.gov.uk/government/uploads/system/uploads/attachment_da ta/file/303334/er84-the-future-of-work-evidence-report.pdf • C. Anderson, J. F. Gantz SKILLS REQUIREMENTS FOR TOMORROW'S BEST JOBS https://news.microsoft.com/download/presskits/education/docs/IDC_101 513.pdf
