Ilmar Põhjala: The future face of the Estonian labor market

Successful organizations of the future will be those that can create a work culture where the experience of older generations is integrated with the fresh ideas of the younger ones, writes Ilmar Põhjala.
Just recently, it was revealed that fewer children were born in Estonia last year than in any year since 1919, when such statistics were first recorded. This is a logical consequence of years of population decline and aging, trends that have shaped Estonia's demographic landscape over the past decades.
Naturally, these processes have already had an impact, but they will soon affect the age distribution of the workforce even more significantly. Population aging, combined with generational differences in workplace expectations, has created a diverse yet increasingly complex work environment. Employers must now carefully navigate these dynamics to reconcile the interests of different generations.
More elderly and Generation Z
According to Statistics Estonia, the active workforce in Estonia is primarily composed of individuals aged 25-49, who account for nearly 60 percent of all employed people. This age group occupies most economically significant roles, bearing the greatest responsibility for income generation and covering societal expenses.
Notably, the proportion of workers over 50 has risen, with this group now making up nearly one-third of the workforce, reflecting the effects of an aging population. For decades, the narrative focused on how difficult it was for older individuals to find work. Now, however, we are entering a new reality where a substantial number of workers in various professions are over 50, while growth among younger age groups remains modest.
Some examples from recent studies and statistics highlight these changes: over half of Estonia's teachers are 50 or older and more than a third are at least 60. A quarter of doctors have surpassed the age of 60. In the public sector, 42 percent of employees are over 50. The list goes on.
This trend is also reflected in a recent salary survey by Figure Baltic Advisory: younger workers dominate the ICT sector, where the core group is aged 30-40, with younger professionals steadily entering the field. In contrast, the public sector is led by those aged 40-50, with the proportion of older workers growing.
Meanwhile, Generation Z, born in the final years of the last millennium and the early 2000s, is now entering the workforce and accounts for about one-fifth of its total. According to our research, the most popular professions among this generation are in customer service, information technology (IT) and telecommunications, sales and marketing. Over half of Generation Z workers are employed in these fields.
This divides younger workers between well-paid and less well-paid sectors. While IT salaries rank among the highest, wages in sales, marketing and particularly customer service are at the opposite end of the spectrum.
Employers will need to become more flexible
The diverse age composition of the workforce presents both challenges and opportunities for employers. The growing proportion of older workers requires more flexible working conditions, such as part-time or project-based arrangements.
At the same time, older workers often have more modest expectations regarding workplace conditions and benefits, as their frame of reference differs greatly from that of those now entering the labor market. For older employees, job stability and salary tend to be the most important factors, with additional benefits offered by employers being secondary.
Younger generations, on the other hand, expect innovation, diverse digital tools and personalized benefits from employers. They also place significant importance on aligning their work life with personal values, often prioritizing work-life balance over income growth.
To attract younger talent, organizations must offer opportunities for continuing education, inclusive work environments and modern technologies. Moreover, the readiness of employers to take clear stances on societal issues and communicate them openly is becoming increasingly important to younger workers.
Flexibility and lifelong learning
The key challenge for the future labor market will be finding balance between the needs and expectations of different age groups. Flexibility is the unifying factor that can address the diverse needs of employees and turn workplace diversity into a business advantage.
Large, one-size-fits-all solutions for workforce management, salary policies and benefits are becoming a thing of the past. Employers must increasingly look for flexible, personalized approaches that address individual employee needs while remaining practical and sustainable from a management perspective. This requires constant training for leaders and regular updates to workforce policies.
In an aging society, lifelong learning and support for career changes will undoubtedly play a critical role. Employers who can create conditions that support horizontal career paths and offer flexible work options will benefit from increased employee loyalty and satisfaction, which in turn leads to greater efficiency.
Navigating ideological issues is undoubtedly more complicated. Over the coming decades, we will likely see organizations whose culture actively integrates specific ideological viewpoints attract like-minded employees while potentially alienating those with differing views. This, too, is part of a polarized world. However, I believe that the greatest successes will be achieved by those who manage to maintain diversity of thought and foster a respectful, open culture of dialogue among employees.
There is nothing new in the idea that collaboration between generations leads to success. Numerous global studies consistently show that organizations with diverse leadership perform better. While much focus is often placed on gender diversity, this is not the whole story. Actively involving people of different ages in organizational leadership and decision-making is also an integral part of diversity, as is the acceptance of differing worldviews.
Successful organizations of the future will be those that create a work culture where the experience of older generations is seamlessly integrated with the fresh ideas of younger ones. For Estonia, this is not just an option but a necessity, given that people aged 50 and older make up a growing share of the workforce, while the number of young people entering the labor market is, for now, still increasing.
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Editor: Marcus Turovski