YOUNG PROFESSIONALS ON ESTONIAN LABOR MARKET

AT THE INITIAL STAGE OF THE TRANSFORMATION

 

Hans Dsiss, cand hist, researcher;

Department of Sociology of Tartu University

Paul Kenkmann, PhD, senior researcher,

Department of Sociology of Tartu University

 

The transition from a strictly planned state socialist system to a free market economy significantly affects and alters the labour market position of young professionals by causing substantial changes in the employment structure which in their turn can lead to deepening socio-economic stratification. In order to obtain empirical data about the initial stage of this process, and correspondingly, about the first cohort of young specialists who proved to be involved in it, the research group on educational sociology at Tartu University carried out a survey among the young professionals who had graduated from the main Estonian universities in 19921. The research was financially supported by the Estonian Ministry of Culture and Education and the Estonian Science Foundation2.

The university studies of the considered young professionals had begun, as a rule, in 1986- 88. Therefore, they became students and most of their studies passed according to the rules, curricula, traditions etc. that belonged to the time when their universities were part of the Soviet system of higher education. The last period of their studies and the beginning of their work career proceeded during the time that was politically and economically a crucial period for Estonia: the country was restoring its independence, the socialist economic system collapsed and was gradually replaced by a free market economy. Instead of officially appointed jobs every university graduate could now choose a job freely having at the same time not given any guarantees to get a job according to the qualification obtained at the university or to find a job at all. Quite new circumstances began to affect the careers of young professionals at the labour market.

Out of the total of 2,327 university graduates of the year 19923 a random 50 % sample of 1,181 respondents was drawn for administering a mail survey. In order to characterise more specifically the graduates of individual faculties the sample was supplemented by a stratified random choice of 266 persons. As a result, the final size of the sample became 1,447. In a mail survey administered in the spring of 1994 the questionnaire was completed by 1,265 respondents. Of them 438 had graduated from Tartu University, 321 from Tallinn Technical University, 247 from Estonian Agricultural University, 194 from Tallinn Pedagogical University, 44 from the Estonian Academy of Music, and 21 from Tallinn University of Art. The obtained data are representative in respect of all studied groups of the graduates.

In considering respondents` work and life careers the data enable to examine their labour market exposure and income at two points in time: in November 1992 or roughly 5 months after the graduation, and in February 1994 or 18 months after the attainment of a university education. Below we look at the employment status of the young professionals in three main spheres: public or state owned enterprises and firms, private firms, and businesses belonging to the respondents themselves4.

This article is aimed at mapping some features of the initial stage of formation of the new professional and social structure. We begin with the presentation of data about the work relations of the young professionals at the very first stage of their employment career. As the cohort of university graduates of 1992 represents the first young generation who faced new challenges of the occupational structure of a free market society, we are giving some insights into the formation of the group of managers that could be seen as typical of the formation of the new occupational structure. The concluding part of the paper presents some results of the study of those members of the cohort of university graduates of the year 1992 whose first employment was in their own private business.

As there is no adequate comparative material5, we can here describe only the situation that has taken shape on the labour market by certain point of time and what should reflect the actual position of the public and private sector and the adjustment of young professionals in this situation. But the somewhat double transitional position of this cohort of young intellectuals - they embody the transition of the system of higher education which made a start during their academic years as well as that of the entire economical and social life where they practically entered as job-seekers and young professionals - makes this description especially valuable.

1. GENERAL CHARACTERISTICS OF THE YOUNG PROFESSIONALS’ STATUS ON THE LABOUR MARKET

1.1. Employment at Public and Private Sphere

The data (see Table 1)6 demonstrate that nearly two thirds of all employed young professionals worked in the public sector in November 1992. One fifth of the respondents were employed in private business and only 2 percent had set up their own.

Table 1.

EMPLOYMENT STRUCTURE OF UNIVERSITY GRADUATES OF 1992

5 MONTHS (1992) AND 1 2/3 YEARS (1994) AFTER THE GRADUATION (%)

 

PUBLIC

PRIVATE

CATEGORIES OF RESPONDENTS

 

Respondents’ own business

Other private business

 

1992

1994

1992

1994

1992

1994

ALL

64

56

2

5

22

30

GENDER

male

55

47

4

8

28

35

female

73

65

1

1

16

25

NATIONALITY

Estonian

65

55

2

5

22

30

non- Estonian

62

60

3

4

19

29

UNIVERSITY

Tartu University

75

69

1

2

15

22

Technical University

48

41

3

6

40

47

Pedagogical University

74

61

1

5

18

24

Agricultural University

58

44

3

8

16

31

Art University

29

21

12

11

18

37

Music Academy

95

97

-

-

2

3

PLACE OF RESIDENCE

Tallinn

62

49

2

4

29

40

Tartu

70

59

3

6

17

26

Pärnu

55

48

7

21

31

27

Other cities

70

68

1

2

19

22

Rural areas

65

57

2

5

15

23

 

Gender is one factor that affects the sector of employment. For example, in education and public health women vastly outnumber men but in these sectors state continued to control the overwhelming majority of enterprises. As a result, at the very beginning of their work careers, about three quarters of female young specialists worked in the public sector. At the same time one third of men had found a job in some private business and 4 percent of them had managed to set up their own firms. There were no major differences in the distribution of the young specialists by nationality.

The employment status of the graduates of individual universities differed considerably. The more humanitarian one’s training (respective departments of Tartu University and the Pedagogical University ), the more likely is he or she to work in the public sector. The only exception concerns the graduates of the Art University of whom only one fifth are employed in this sector. The Technical University and the Agricultural University that furnish specialists mainly to the production sphere and among whose graduates men outnumber women seem to provide better chances for using the knowledge and training in private business. Two thirds of the graduates of the Technical University were employed in such firms. This accounts for half of all respondents who had found jobs in the private sector. Although only 3 percent of the graduates had established their own firms they constituted a third of all entrepreneurs. Altogether those with a diploma of an engineer or agricultural specialist make up two thirds of the respondents who were employed in their own business.

The residential structure of young professionals reveals substantial differences between those who were engaged in the public and private sector. This points to major regional differences in the employment conditions of young professionals at the time when the official appointment of jobs was abandoned and all university leavers were free to choose a place of employment and residence. Naturally, the existence or absence of respective jobs restricts such chances.

From the very beginning of the transition to the market economy it was clear that small towns and rural communities with a limited number of professional jobs were unable to compete with the capital city on the labour market. Neither could this be expected from the disarranged social sphere. Tallinn as the capital with its developed infrastructure offered to young job seekers far more alternatives than any other city or town. As a result the share of respondents employed in the private business in Tallinn exceeded twice their proportion in the rural areas. Somewhat unexpectedly our findings suggested that it was not the second largest city Tartu, the old university town, but Pärnu, a resort and port city that competed with the capital in respect of the development of the private sector and providing premises for founding personal businesses.

It is interesting to observe what changes had occurred in the employment structure of young professionals during the very first stage of their professional career. The period involved was from November 1992 to February 1994. It is possible to follow respondents` movement between the organisations and enterprises with different ownership as well as people who have set up or abandoned their own business.

Changes in the structure of respondents` main jobs depended on their gender and nationality. The movement from positions in the public sector into the private sector characterises both men and women. The public sector lost 8 percent of the young professionals over the period of 14 months and as a result less than half of men worked in state owned enterprises in February 1994 while more than two fifths were employed in the private sector or had become entrepreneurs. In contrast to non-natives, Estonians have better adjusted to the new conditions: more than a third of them had jobs in the private sector.

Like in 1992 the type of attained education continued to differentiate the respondents. It was only the graduates of the Music Academy who retained their employment structure. At the same time the public sector lost 13-14% of the graduates of the Technical and Agricultural University. By February 1994 the private sector employed more than half of the graduates of the Technical University, a third of the agricultural professionals, and nearly half of those of the Art University.

Our findings show that the growth of private business was fastest in Tallinn where the share of state owned and private economy among the workplaces of the young professionals was by February 1994 almost equal. Most rapid has been the foundation of one’s own businesses. In this respect Pärnu vastly outranks Tallinn. As far as the university town Tartu is concerned the labour market changes here were closer to shifts that had occurred in small towns and rural areas than to those in Tallinn, let alone Pärnu.

  1. Income

About 5 months after the graduation the average monthly salary of the young professionals was 940 kroons (Table 2).

Table 2.

MONTHLY SALARY OF THE UNIVERSITY GRADUATES OF 1992 5 MONTHS (1992) AND 1 2/3 YEARS (1994) AFTER THE GRADUATION (in Estonian kroons)

 

AVERAGE

PUBLIC

PRIVATE

CATEGORIES OF RESPONDENTS

   

Respondents’ own business

Other

private firm

 

1992

1994

1992

1994

1992

1994

1992

1994

GENDER

male

1206

2649

1013

1886

2521

4930

1452

3177

female

680

1382

585

1173

400

600

734

1749

NATIONALITY

Estonian

967

2058

781

1484

2512

4738

1230

2692

non- Estonian

607

1448

612

1285

475

2375

497

1641

UNIVERSITY             Tartu University

737

1692

667

1284

617

1440

902

2704

Tallinn Technical University

1226

3153

938

2123

4971

10030

1331

3207

Tallinn Pedagogical University

802

1458

650

1064

400

1158

898

2043

Estonian Agricultural University

883

1532

566

1379

967

2025

1363

1753

Tallinn Art University

596

1687

510

1000

400

2000

900

2000

Estonian Music Academy

1741

2155

1854

2140

-

-

300

3000

PLACE OF RESIDENCE

Tallinn

1071

2605

829

1709

5460

9436

1334

3197

Tartu

654

1352

538

1113

783

1600

1036

1798

Pärnu

768

1721

622

1505

450

2100

957

2231

Other cities and towns

7905

1583

775

1207

725

1600

960

1670

Rural areas

642

1454

565

1122

2667

3600

796

2123

MEDIAN

940

2020

769

1483

2297

4628

1180

2616

Comparing these figures with the average gross salary of 802 kroons in Estonia in the last quarter of 1992 it can be said that the material situation of young intellectuals was somewhat better. It is significant that men earned about twice more than women.

The gap between the salaries of the graduates of different universities was rather large. So, graduates of the Music Academy earned 2.9 times more than those who had received their education at the Art University. The same table suggests that the residents of Tallinn did best of all by receiving salaries that were 1.7 times higher than those obtained by university graduates in Tartu and in the rural areas.

Respondents’ average monthly pay more than doubled by February 1994 and continued to exceed the same indicator of the overall population ( according to the Statistical Office the mean gross salary was 1,410 kroons in the first quarter of 1994). The largest growth concerns the earnings of the graduates of the Art University and the Technical University, and the non-Estonians. In absolute figures the technical professionals overwhelmingly outrank the graduates of all other universities. The income of the young professionals who had received their training at the most prestigious Estonian institution of higher education - Tartu University - was nearly two times smaller, hardly exceeding the earnings of the graduates of the Pedagogical University and the Agricultural University.

Our findings imply that persons working in the private sector earned nearly twice more than those employed in the public sector. Particularly high was the income of those respondents who had established their own businesses. Smallest of all was now the income of non-Estonian women, regardless of their employer. The division of young intellectuals by socio- professional indicators reveals very big differences. Men employed in their own firms earn 8.2 times more than women, Estonians twice more than non-Estonians. Pay differences were smaller in the public sector where women earned 1.6 times and non-Estonians 1.2 times less than men and Estonians, respectively. The fact that the graduates of individual universities were unevenly represented in the public and private sector explains large gaps in their salaries. The graduates of the Technical University obtained highest income not only in their own businesses, but also in other private as well as state owned enterprises. In contrast to Tallinn where big money moves, above all, in private firms, the professionals in Tartu and rural settlements are the lowest paid.

The above said described the situation of young professionals on the labour market. In contrast to less educated people, unemployment was quite rare among the young intellectuals, particularly among those who exhibited initiative and enterprising.

Secondly, our research reveals that the earnings of young professionals were differentiated, first of all, by the ownership form of the enterprise where they were employed. The technical intellectuals obtained higher income than the rest of the professionals chiefly due to their concentration into their own and other private businesses.

Thirdly, the transition to a market economy changed the traditional economic hierarchy of Estonian settlements: Tartu failed to compete not only with the capital city but also with smaller towns that had been able to create more favourable conditions for private initiative.

1.3. Occupational Structure

The survey of the occupational structure of young professionals (see Table 3) suggests that in 1992 about two thirds of them held jobs that according to international standards (ISCO-88) required a university education.

Table 3.

CHANGES IN THE OCCUPATIONAL STRUCTURE

OF UNIVERSITY GRADUATES OF 1992 (%)

PROFESSIONAL GROUPS

November 1992

February 1994

Professionals

67.0

59.9

Managers

12.6

18.9

Semi-professionals

8.9

9.6

Clerks

3.6

4.6

Service / sales workers

2.7

2.3

Agricultural/ fishery workers

1.8

2.1

Craftsmen

1.8

1.2

Operators

0.4

0.8

Unskilled workers

1.2

0.6

TOTAL

100.0

100.0

The group of professionals, anyhow, lost people who replenished most often the ranks of the managers. Between 1992 and 1994 the group of managers grew most rapidly, constituting in 1994 about one fifth of all employed persons who had graduated from universities in 1992.

2. SOME FEATURES OF THE GROUP OF MANAGERS

Stemming from these facts and having in mind that managers7 is a new category in the employment structure of professionals that had no direct analogies during the Soviet period (and therefore, managers were not educated at that time), we examine more closely the composition of the group of young managers and the changes that have occurred in their careers as well as possible connections with the speciality they attained at university (Table 4).

2.1. The Composition of the Group of Managers

What was the socio- demographic composition of young managers at their first job in 1992? 97 percent of them were Estonians and three quarters men, nearly half of them were the graduates of the Technical University; one quarter had come from the Agricultural University while one fifth had attended Tartu University. Most young managers were employed in the private sector, but as a rule not in their own enterprises. Nearly half of them worked in the capital city Tallinn, one third in other cities and 15 percent in rural settlements.(see table 4).

Table 4.

CHANGES IN THE COMPOSITION OF THE GROUP OF MANAGERS (%)

CHARACTERISTICS OF YOUNG PROFESSIONALS EMPLOYED AS MANAGERS

November 1992

February 1994

TOTAL SHARE

12.6

18.9

GENDER

male

75

79

female

25

21

NATIONALITY

Estonian

98

97

non- Estonian

2

3

UNIVERSITY

Tartu University

20

17

Tallinn Technical University

45

47

Tallinn Pedagogical University

7

6

Estonian Agricultural Academy

26

29

Tallinn Art University

-

-

Estonian Music Academy

2

1

PLACE OF RESIDENCE

Tallinn

47

46

Tartu

16

14

Pärnu

6

4

Other cities and towns

13

19

Rural areas

18

17

FORMS OF OWNERSHIP

Public

40

36

Private

53

57

incl. own business

11

17

other firms

42

40

By 1994 the group of managers constituted nearly one fifth of all economically active respondents, that is more than three times more than was the share of managers in the overall economically active population in Estonia8. Therefore, young and educated persons were more successful in occupying these new and promising positions. The most significant changes in the composition of the group of young managers concern the ownership form of the enterprises where they are employed, and their university field. The number of respondents working in their own enterprises has substantially increased. This growth has mainly occurred at the expense of the graduates from the department of economics of the Technical University and rural engineers - the graduates of the Agricultural University.

A more detailed analysis of the occupational structure of managers suggest that one quarter of them worked as project leaders; one fifth as managing or deputy directors of businesses enterprises; one sixth worked as heads in finance, personnel, marketing, advertising, purchasing, or research departments. The same number of respondents were employed as head specialists or advisers, while 10% were production heads in agriculture, construction, trade, catering, transportation or service industries, about 6% ran a small sub-unit of some structure, 5% were leaders in local governments and almost as many in education, culture, and public health.

The analysis of the dynamics of changes shows that more than four fifths (83%) of the respondents who were managers at the beginning of their employment career had maintained their posts by 1994. At the same time, due to a rapid growth of the group of managers, they account only for 55% of all managers in 1994. Thus it can be said that nearly half of those who were managers in 1994 had held some other posts one and a half years earlier. The group of managers had grown chiefly at the expense of humanitarians (27%) and semi-professionals or technicians (13%).

The internal occupational mobility of managers suggests that almost three quarters (71%) of them had retained the post they had had in 1992. The most mobile group had been that of managing directors and their deputies of whom nearly half had changed their posts.

2.2. University Training and the Managerial Work

The analysis of the relationship between the work and speciality shows that only one out of five young managers used fully their university training at their first place of employment in 1992, while about half of them used it to some degree and one third worked quite in another field. In comparison with all university graduates, managers are twice less likely to use directly their university training. In 1994 the situation was very much the same. Managers seemed to have the best chances for using the professional training obtained in universities when employed in environment, agriculture, transport, and communications. Those persons who were working as managers in the public sector were more likely to use their professional training.

As the findings indicate the work of those respondents who had founded their own firms was least of all related to their university training, while those who were employed in other private enterprises could use their professional training only to some extent. It is necessary to emphasise that all these findings are based on the self-estimations of the respondents.

It seems that at least at the very beginning of the transition many young professionals, in particular those employed as young managers, began their work career not so much applying the professional skills obtained in universities, but seeking a more lucrative activity for starting the independent life. The most important advantage of working in a private enterprise and the main reason for moving from public to private sphere at the given period of time was that incomes were considerably higher in the private sector. This is confirmed by the income in spring 1994 of graduates who were managers in their own business: their earnings were more than two times higher than those of young professionals in average.

3. FROM UNIVERSITY TO BUSINESS9: YOUNG ENTREPRENEURS FROM THE ANGLE OF A QUALITATIVE STUDY

As was shown at the beginning of this article, 2 % of the respondents began their employment career in their own business. By February, 1994, or 18 months after graduating from universities, their share was already 5 %. It made up 51 respondents of whom 6 were women. This group, or more precisely - the beginning of the corresponding employment career, the circumstances of choices that led to this position, attracted our special attention.

Most often those young entrepreneurs had graduated from Tallinn Technical University and Estonian Agricultural Academy; 30 university specialities were represented altogether among the 51 entrepreneurs. As could be expected, approximately in a half of cases the area of business activities was fully different from that studied in the university.

To collect data about these specific life careers, interviews were conducted with the respondents whose first workplaces were their own business enterprises (or - in some cases, top posts in private enterprises owned by other persons). 14 young entrepreneurs were interviewed by students of the Faculty of Social Sciences. Therefore, it was a typical qualitative study. We present the results here as description of the typical opinions, estimations, etc. of the respondents.

3.1. Characteristics of the Entrepreneur’s Position

The foundation of one’s own business was characterised by the respondents, first of all, as acting on a favourable chance or opportunity, utilising of self- actualisation possibilities - and practically never as a step toward implementing certain ideas worked out during the university studies. The setting up of a business was chiefly regarded as a result of one’s own personal activity. The role of parents and friends was seen as unimportant, consisting most frequently in providing start- up loans.

The work done in one’s own business is mostly characterised as managing and guiding subordinates (their number is typically less than 10), dealing with customers and managing business affairs outside the firm. Young entrepreneurs report to a lesser extent of being engaged in shaping future business strategies. According to general estimations, that kind of work is rather strenuous. It is typical that the amount of work to be done is reported as much bigger than that of the subordinates, and with a disturbingly uneven rhythm.

All the young entrepreneurs pointed out that the personality traits necessary for the work in business differ considerably from those needed at other areas where young professionals can be employed. The personality qualities necessary for working in one’s own business are, according to the opinions of the respondents, will- power, thinking ability, industry, and also consistency and communicating skills. Thus, we deal not with any extraordinary qualities, but with a bigger role of the qualities of so- called strong personalities, than it is needed in the case of most other occupations.

The interviewed young entrepreneurs were quite unanimous in seeing themselves as more prosperous than the majority of the recent fellow- students. This applies, first of all, to their financial situation. Possibilities for spending larger sums of money on vacations with the families were most often mentioned as the criterion of the material well- being. It can be concluded that the higher living standard was an important value for these young businessmen, and the career of an entrepreneur was seen as providing more chances to achieve this target when the studies were over.

3.2. Future Expectations and Opinions about Education

As a rule, the future outlook of the young entrepreneurs was optimistic. The most typical intention was to expand the business by setting up subsidiary enterprises or by engaging in new fields. Investment of the profit, first of all, in expanding of the business is seen as natural.

The future from a personal viewpoint should differ from the current reality above all by less work pressure. Young businessmen mentioned that their strenuous, arrhythmic life forced upon them more healthy lifestyles than was typical of their generation in general. It resulted in strivings for regular physical exercise. Basketball was mentioned as the most popular, but golf was also among the favourite sports. On several occasions, hopes for less work pressure were linked to arranging a more normal family life that so far had been hampered by their careers.

The young entrepreneurs were rather unanimous in their interviews when the assessment of their university education was concerned. The opinion was that university studies provided little for their current business activities. This estimation did not depend on the specifics of the field of study. However, the role of general education received at the university (computer studies began to appear as a component of this education) is highly valued. It was emphasised by several respondents that they could not have achieved any success in the field of business without such education. But special knowledge obtained at the university and their current activities in their own enterprises were treated as rather different things.

It is worth mentioning that on the background of this general attitude toward the university education they had received, majority of the young businessmen had the opinion that in principle higher education should be accessible to everybody who wished to obtain it. Secondary education was regarded as compulsory. The most widespread requirement put before the universities was that of larger choice of alternative subjects. The effective system of advanced training courses was also a common requirement that was put before the system of education by the young entrepreneurs.

CONCLUSION

The data and empirical conclusions presented here gave a picture about the formation of the first steps of the employment careers of young professionals belonging to a specific educational cohort. This specificity stems from the position of the cohort in the course of the radical social change. Data about the cohort of university graduates of the year 1992 shed light on the very beginning of the formation of the new social structure on the basis of young professionals’ self-determination. They speak also about the role of higher education in this process10.

The empirical evidence like the data presented here are, as we think, valuable not so much as a description of one segment of the formation of the new social structure and the structure of labour force in a post- socialist society. The data can serve as a basis for further studies of these processes in the course of development of the society in transition. It is possible to build up large- scale monitoring of the life careers of young intellectuals in the society in transition. It is also possible - to use the data base created while surveying the Estonian university graduates of the year 1992 - to study the employment careers of those young professionals longitudinally. In any case, it opens good possibilities to trace the employment and life careers of representatives of an educational cohort in a way that is analogous to the development of the corresponding structures of the society in transition, and seeing the members of the cohort also as agents of the transition.

 

 

NOTES

1 Senior researcher of the department of Sociology Cand. Psych. Jüri Saarniit was the head of the research team.

2 The research was designed as a comparative one with a Norwegian study conducted by the Institute of Educational and Youth Research in Oslo.

3 The statistical data and other information about the university graduates were obtained from the Ministry of Culture and Education and the universities.

4 The first version of this paper was presented at the Second Seminar on Middle Classes of the Post- socialist and Western Countries, Tallinn, October 13- 15, 1995.

5 See: H.Best, U.Becker. Social Sciences in Transition: Emerging Fields of Research and the Transforming Role of Social Science Information in a New Europe. - in: H.Best, U.Becker, A.Marks /eds./. Social Sciences in Transition: Social Science Information Needs and Provision in a Changing Europe. - Berlin: Informationszentrum Sozialwissenschaften, 1996.

6 The research data, although depicting only a minor segment of the work force and its structure, are in general in accordance with the statistical data about the employment situation. See. Sotsiaaltrendid. - Tallinn: Statistikaamet, 1998. - 3.ptk. /Social Trends - in Estonian/.

7 According to the definition elaborated by Melvin L.Kohn and his associates while analysing the Polish and Ukrainian transitional societies, managers are “Employees who direct and control the operation of a firm, organization, or major governmental unit or large subdivision thereof, as well as other employees in appropriate occupational categories who directly or indirectly supervise the activities of more than 50 people, some of whom themselves are supervisors.” - Melvin L.Kohn, Kazimierz M.Slomczynski, etc. Social Structure and personality under Conditions of Radical Social Change: A Comparative Analysis of Poland and Ukraine. - American Sociological review, Vol. 62, 1997, No 4, p. 619.

8 Estonian Media Book. - Tallinn, 1994, p. 12.

9 An initial summary of these findings was published in: Paul Kenkmann. From University to Business: Some Sociological Notes. - EBS Review, 1995, October, No 2.

10 See: Edward B.Jakubauskas. - Baltic Economic Development and Some Implications For Post- Secondary Education. - Journal of Baltic Studies, Vol. XXVIII, 1997, No  1, pp. 89- 94.