The integration of the Baltic countries to EU is accelerating, and we are seeing a significant increase of business activities, including direct investments. Most of the investors are, and will be, from overseas or nearshore territoritories. But while the investors remain abroad, the actual business activity is controlled by locally hired employees. The markets are after all rather small, and in most cases expats are too expensive for locally generated cashflows. Thus the key for the successful business is to find the right local people who can manage the business.
Labour markets are not the same across the Baltics. In each country there have been different development scenarios since independence was regained, and that has caused differences in the supply of qualified workforce.
Estonia is the most mature labour market in the Baltics. In the early 1990s 20 - 22 year-olds were placed in managerial position when the first international companies started local operations. Privatisation was fast and effective, giving the young generation opportunity a chance to manage some of the biggest enterprises. These youngsters were coached mostly by Finnish and Swedish businessmen. Then, in the late 1990s a concentration of businesses took place that significantly decreased the demand for this type of management. Only the best stayed on the scene. Now this group of people – in their mid-30s – possesses the experience and potential for employers. The biggest limitation is that their educational background is not as solid as work experience.
In Latvia privatisation took place a few years later than in Estonia, and the younger generation was not given much of a chance. The international business community only started to appear in the second half of the 1990s. Since then, however, the labour market in Riga has been developing rapidly. Riga has become the real Baltic centre since 1997-1998, and most of the international companies have established their offices in Riga.
Only Riga has an adequate supply of candidates with pan-Baltic experience. Riga is the place to recruit sales and marketing professionals to run the front office despite higher salary costs. But even those people have only 3-4 years of experience in multinational companies and often do not have the business degree. Still, their practical experience is extensive, and their factual competency has been buttressed by career development programs of multinational companies. Thus Riga will become more similar to Praque in a couple of years.
Lithuania has been the most conservative among the three Baltic countries. The initial privatisation supported local enterpreneuers, and most of companies were privatised by existing management teams. Even in late 1990s there was very few managers under 35 years. Young people were engaged in minor roles, which gave them more time for studies. In Lithuania education is highly valued, and it is considered an honour for families to finance their children's studies in prestigeous universities. Though Lithuanians ususally lack the strong track record, they have the potential to run the operations of most international companies.
Based on the situation on Baltic labour markets, international companies have good reason to establish sales and marketing operations in Riga and recruit professionals from Estonia and Lithuania given that there is a better labour supply available. From Estonia they will most probably find mature, experienced, stable workers. The top candiates from Lithuania will be well-educated, though will less experience, but they are very ambitious and achievement-driven.
Agu Vahur is vice president of Professional People CV-Online Group