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Report: Labour market need increasing for people with specific skills

Construction workers in Estonia. (Photo is illustrative).
Construction workers in Estonia. (Photo is illustrative). Source: Rene Suurkaev/ERR

The Estonian labour market has an increasing need for people with specific skills and knowledge, and companies are also moving to regions with a strong talent base, it appears from the "Labour Market 2035" report published by the Foresight Centre, a think tank at the Riigikogu.

"The implementation of automatised solutions is already today reducing the number of routine jobs requiring a low skill level and few cognitive skills," it is said in the think tank's report on the future directions and scenarios of the labour market.

According to the authors of the report, in several fields, the disappearance of simpler jobs is only a matter of time. At the same time, the disappearance of jobs is not a zero-sum game, as existing jobs will become more complex, and new types of jobs will emerge.

A large part of these jobs have to do either with people's skills regarding the application of technology or skills that cannot be replicated by machines, such as creative problem-solving, empathy and willingness to cooperate.

The authors found that people should be content with this change, as a greater number of more complex jobs indicates the movement toward a knowledge-based and innovative economy.

At the same time, the report indicates that the duality of the labour market and the polarisation of incomes continues to deepen. Furthermore, it is jobs requiring an average skill level that are showing a tendency to disappear as lower-skilled jobs emerge in new fields.

"As welfare increases, demand for simpler personal and convenience services will increase, which means that there may be jobs, but the income received from them is often several times lower than from a highly skilled job," it is observed in the report.

When considering the future of the labour market, the issues of demographic developments and migration cannot be ignored, the authors wrote. Prolonged lifespans and a birth rate below the recovery level has resulted in the share of dependents in Europe gradually increasing compared with the working-age population, and Estonia is no exception in this regard.

"In recent years, the topic of migration has become burningly critical in the EU's plans, and it is unclear whether development will move toward reclusion or openness in the future," the authors wrote.

Estonia to face one of four scenarios

As a result of the combined effect of the aforementioned factors and trends, the authors of the report compiled four alternative development paths for Estonia.

These are multivariate development paths with their fundamental possibility being an important factor. Any of the scenarios under analysis may be realised, and one must be prepared for the realisation of any one of them.

According to the first scenario, Tallinn is to become a centre for international talent. Furthermore, the economy is to develop quickly, but a certain portion of the workforce is dissatisfied with the increasing societal and regional inequality and considers the change to be too drastic.

In the second scenario, Estonian companies are to have the opportunity to modernise their activity and processes and transfer to more innovative business models, but the shortage of talent caused by the restrictions on labour migration sets restrictions on development. According to this scenario, the Estonian economy will suffer from a shortage of innovative and new breakthrough companies, which means a slow change in the employment structure and limited opportunities for self-realisation on the labour market.

The third scenario foresees Estonian companies postponing automation as it is relatively easy to find and recruit a workforce from third countries, and with a smaller income. Elsewhere in the world, automation brings a victory in efficiency, and over time, Estonian companies will also be forced to either invest in technology or lose their competitiveness. Extensive migration, weak salary growth and growing unemployment will bring with them dissatisfaction in society.

According to the fourth scenario, automation and limited labour migration will simultaneously cause a drop in employment with regard to routine jobs as well as a shortage of people necessary in fields requiring more complex skills. Routine jobs will disappear, but there is a limited number of new job opportunities. Should this scenario come true, society will be faced with the new, demanding challenge of assigning a new understanding to work and work values.

The aim of the Foresight Centre's "Labour Market 2035" report is to introduce the more significant labour market changes in Estonia to those interested as well as decipher them from the policy-making perspective.

The Foresight Centre, a think tank at the Riigikogu, is tasked with the analysis of society's long-term development, the discovery of new development directions as well as the compilation of development scenarios, among other things.


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Editor: Aili Vahtla

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