Analytics, Economics, Employment, Estonia, Labour-market
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Friday, 26.04.2024, 21:41
Estonian labor market needs increasingly more people with specific skills – report
"The implementation of automatized solutions is already today
reducing the number of routine jobs requiring a low skill level and few
cognitive skills," it is said in the report on the future directions and
scenarios of the labor market.
Authors of the report said that 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 those jobs have to do either with people's skills
regarding the application of technology or skills to do things that machines
cannot do, for example, solve problems creatively, be empathetic and willing to
cooperate.
The authors said that people should be content with the given change as a
greater number of more complex jobs means movement toward a knowledge-based and
innovative economy.
At the same time, the report shows that the duality of the labor market
and polarization of people's incomes is ever deepening. At that, jobs requiring
an average skill level are rather disappearing and jobs with a lower skill
level are emerging 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 that is often several times lower than in a job requiring a high
skill level," it is said in the report.
The authors said that looking at the future of the labor market, the
issues of demographic developments and migration cannot be ignored. A prolonged
life and a birth rate lower than the recovery level has resulted in the share
of dependents in Europe gradually increasing compared with the working-age
population. Estonia, hereby, is no exception.
"In recent years, the topic of migration has become burningly
critical in the plans of the European Union and it is unclear whether
development will move toward reclusion or openness in the future," the
authors said.
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. All scenarios under analysis may be
realized and one must be prepared for the realization of each one of them.
According to the first scenario, Tallinn is to become an international
talent center. The economy, at that, 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.
According to the second version, Estonian companies are to have the
opportunity to modernize their activity and processes and transfer to more
innovative business models, but the shortage of talent caused by the
restrictions on labor migration sets restrictions on development. According to
this development, the Estonian economy will suffer from a shortage
of innovative and beginning breakthrough companies, which means a slow
change in the employment structure and limited self-realization possibilities
on the labor 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 an efficiency
victory 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 along dissatisfaction in the
society.
According to the fourth development path, automation and limited labor
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 are not that many new
job opportunities. Should this scenario come true, the society will be faced
with a new demanding challenge of giving a different sense to work and work
values than before.
The aim of the Labor Market 2035
analysis direction of the Foresight Center is to introduce the more significant
labor market changes in Estonia to those interested and decipher them from the
perspective of policy-making.
The tasks of the Foresight Center, a think tank at the Estonian parliament,
include the analysis of the society's long-term development, discovery of new
development directions and the compilation of development scenarios.