Theoretical approaches as well as state policies see the labour market as an important entry point for immigrants into their host society (Lessard-Phillips et al. 2012). The success of labour-market integration depends on a number of factors, both individual (e.g. skills and personal attributes) as well as structural and institutional factors (immigration policies, educational systems and labour-market regulations, also anti-discrimination measures to ensure equal opportunities in the labour market). Empirical evidence clearly shows that the labour market position of immigrants or ethnic minorities is worse than that of the native population - the ethnic majority - but much depends on the circumstances of their arrival, country of origin, and level of education and other skills, including language proficiency (Crul & Schneider 2010).

The capacity of the state to integrate newcomers might best be evaluated not by analysing the success of the first generation, but of their children, i.e. the second-generation immigrants (Portes & Rumbaut 2001). This approach might be applied to Estonia society as well, given that the second and third generation of people who arrived in Estonia after World War II from the Soviet Union have already entered the Estonian labour market. At the time their (grand)parents arrived in Estonia, the political, social and economic context was totally different from the current one, although geographically it is still the same.

This chapter focuses on ethnic segregation, i.e. the differences in distribution of ethnic groups across occupations and industrial sectors. Segregation in the labour market has two distinct dimensions: horizontal (distribution across industrial sectors) and vertical (distribution across hierarchically-ordered occupational groups). Lack of day-to-day communication and cooperation at work - one of the main domains of people’s lives - undermines the cohesion of a society.

The results of an integration monitoring study of Estonian society from 2015 show that 56% of Estonian-Russians and 49% of ethnic Estonians communicate with people of different ethnic backgrounds in workplaces, while significantly fewer of them - 36% and 23% respectively – interact during leisure time (Kruusvall 2015, 65–66). The second important way that ethnic segregation in the labour market might undermine cohesion is the resulting perception of inequality. To put it another way, ethnic inequality in the labour market undermines cohesion to the extent that disadvantaged people feel it to be unfair. According to this 2015 integration monitoring study, only 1 in 3 respondents of non-Estonian ethnic origin (mainly Estonian-Russians) perceives their opportunities to get a good job in the private sector to be equal to those of Estonians, while 1 in 2 Estonian holds this opinion. Both Estonians and non-Estonians are even more critical with regard to opportunities to attain managerial positions in public administration: only 1 in 11 ethnic Russians and 1 in 4 Estonians perceive equality or opportunity in this regard. The conclusion is quite clear: Estonian-Russians perceive inequality of opportunities for success in the Estonian labour market.

This chapter seeks to answer three main questions. First, to what extent are ethnic Estonians and representatives of other ethnic groups (first of all Estonian-Russians) segregated based on occupation and industrial sector? Second, what kind of changes have occurred during the last 25 years? Third, how does horizontal segregation contribute to vertical segregation? Data from the Estonian Labour Force Survey (ELFS) from the period 1989–2015 are used. Unfortunately the sample of this survey does not allow us to draw any conclusions about people who arrived in Estonia during the last 25 years. Given that the great majority of the people of other-than-Estonian ethnic origin are those who arrived in Estonia after World War II from the Soviet Union, and their descendants, who are mainly ethnic Russians or speak Russian at home, the term Estonian-Russians is used here to distinguish them.

Ethnic differences in unemployment rates

We begin the analysis of the ethnic dimension of the labour market from the unemployment rate because unemployment characterizes exclusion from the labour market or restricted integration capacity. The unemployed are defined as people who do not have a job, have actively looked for work in the past four weeks, and are currently available for work. The previously-mentioned data from the ELFS indicate that the labour market experience of Estonian-Russians after the regaining of independence was more problematic than for Estonians since their unemployment increased more rapidly compared to Estonians and its intensity depended on economic cycle more (Figure 1). However, the time-dependence of unemployment has been quite similar for the ethnic groups: at the end of the 1990s the unemployment rate increased, but mainly for Estonian men and Estonian-Russian women. The rise of the unemployment rate among Estonian women as well as Estonian-Russian men was more moderate during this period. The economic boom at the beginning of this century was not accomplished by substantial changes in the distribution of employment risks and opportunities between ethnic groups. From 2000 to the start of the economic crisis in 2008, unemployment decreased substantially among both ethnic groups, but the unemployment rate nevertheless remained higher for Estonian-Russians than for Estonians. While in 2001 the unemployment rate among the Estonian-Russian population of working age (age group 15-74) was 1.6 times higher than the respective indicator among Estonians, in the years 2004-2006 the difference rose 2.4-fold. The ethnic difference among populations in the best working age (ages 25-39) was even higher: between 2001-2006 the difference rose from 1.8-fold to 3.3-fold. Differences were especially remarkable in the female unemployment rate: for example in 2005 the unemployment rate among Estonian-Russian women was 3.1-fold higher compared to the respective indicator for Estonian women. At the beginning of the economic crisis in 2008 the gender differences in both ethnic groups practically disappeared (but not the differences between ethnic groups). During the crisis Estonian-Russians were disproportionately affected by unemployment as well as other changes in the labour market (for example the reduction of working hours, lay-offs, etc.). For 2010 the unemployment rate among Estonian-Russian men increased to a record 27% and among Estonian-Russian women to 22%. The economic crisis affected young people even more heavily: the unemployment rate among 15-24-year-old Estonian-Russians rose to 43% in 2010. The ethnic differences decreased for 2015, but the unemployment rate is still 1.5-fold higher than this indicator for Estonians. The ethnic differences are the biggest in the age group 15-24: the unemployment rate of Estonian-Russian young people is still very high (22.6%), surpassing the Estonian indicator 2.1-fold (the unemployment rate for Estonian young people in 2015 was 10.6%). In short, we noticed a typical situation applying also in Estonia: the ethnic differences in the unemployment rate are higher in economically-difficult times and smaller in good times.

Figure 3.4.1. Unemployment rate by ethnic group, 1997-2015

Source: Statistics Estonia

Ethnic horizontal segregation in the labour market is indicated by the distribution of ethnic groups between economic sectors. This distribution in Estonia is mainly the legacy of the Soviet period, reflecting the power relations of the command economy. It was mostly industrial workers who migrated to Estonia as a result of the policy of modernization, urbanization and industrialization directed by the Soviet Union. But the ethnic differentiation became especially obvious in the second half of the 1960s, after substantial changes in economic regulations. Only the smaller labour market segment, the so called ‘local labour market’ remained under the control of Estonia due to centralization of power relations in the command economy. While the all-Union economy recruited its labour force from outside of Estonia, the labour force for enterprises under local control was prepared by Estonian educational institutions. Ethnic differentiation was accompanied by social inequality: all-Union enterprises were tightly connected with the defence industry and it meant that all benefits received through them (for example flats and consumer goods) were substantially more favourable compared to benefits offered by the local economy. Such distribution of benefits through enterprises had a strong effect on the welfare of people and also on ethnic relations. Command power relations were abolished after the restoration of independence but the new power relations did not diminish ethnic separation. However, the ethnic distribution by economic sectors changed somewhat. The proportion of Estonian-Russians in the public sector decreased, as Russian-speaking entrepreneurs moved from industry to service (for example to wholesale) (Vöörmann & Helemäe 2003).

The horizontal segregation of the labour market is also substantially connected to ethnic-linguistic distribution in the Estonian educational system through the language of instruction, the attained level of education as well as speciality. For example graduates of basic schools with Russian language instruction often continue their studies in vocational secondary schools, but a higher proportion of graduates of Estonian schools continue on to gymnasiums or general secondary schools (Lindemann & Saar 2012). The problem is that often it is not a free choice: in the Study of Social Groups in the Sphere of Integration, Russian young people pointed out that vocational school was an involuntary choice for many because young people were afraid that they could not manage with studies in Estonian (MEIS 2013). There is a distribution of specialities in vocational schools based on language of instruction: the higher proportion of students in Russian vocational schools study technical specialities but in Estonian schools it is service specialities. The reason is the distribution of specialities in vocational schools with different language of instruction.


The dissimilarity index has been used to measure labour market segregation. The index score is interpreted as the percentage of Estonians (or Estonian-Russians) that would have to change economic sector (or occupational group) to a different sector (or occupational group) in order to produce a distribution that matches that of the other group. The value ‘0’ in the index implies that the distribution of ethnic groups between sectors or occupational groups is practically the same (for example the proportion of industrial workers in both ethnic groups is equal). The index score of ‘100’ means that Estonians and Estonian-Russians are basically working in different sectors or occupational groups. A dissimilarity index of ‘20’ means that 20% of Estonians or Estonian-Russians need to change their sector to obtain equal distribution in employment.

Next we characterize the main trends in ethnic labour-market distribution by economic sector. As we see in Figure 2, the values in the horizontal ethnic dissimilarity index fluctuated between 1989-2015. However, in general the values in this index decreased until the first half of the 2000s and therefore also the ethnic segregation by economic sector. The index was 33% at the beginning of the 1990s but reached the level of 20% in 2015. In the 1990s the horizontal dissimilarity index decreased substantially reflecting the drop in the proportion of the employed in two ethnically-segregated sectors (agriculture where Estonians dominated, and industry where Estonian-Russians dominated). In 1989 21% of working population was employed in agriculture and 30% in industry. By the end of the 1990s these proportions had dropped respectively to 8% and 25%. The structural changes generated some decrease in the dissimilarity index in 2015. Therefore the ethnic horizontal segregation in the Estonian labour market is not a very important problem.

Figure 3.4.2. Horizontal ethnic dissimilarity index in the labour market, 1989-2015

Source: Authors’ calculation based on Estonian Statistics using the EMTAK 2008 classification of economic activities

The horizontal dissimilarity index indicates only general trends, while the ethnic distribution by economic sectors gives the more accurate picture about the actual state and the changes in labour-market ethnic segregation. A comparison of the data from 1989 and 2015 indicates that the list of economic activities where Estonians or Estonian-Russians are over-represented has not significantly changed. Estonians have been over-represented among the employed in agriculture, education and the arts; Estonian-Russians have been over-represented among the employed in industry, transportation and storage. Nevertheless one substantial change has happened after the declaration of independence: while in 1989 Estonian-Russians were over-represented among the employed in public administration, defence and social security, in the first half of the 1990s the ethnic proportion changed in the opposite direction. The requirements for Estonian citizenship and Estonian language knowledge introduced for employees in public administration and more broadly in the public sector have contributed to this change.

It is possible to estimate ethnic segregation based on the ethnic composition of boards of enterprises and work collectives. Only in 9% of Estonian enterprises are Estonians the members of boards together with representatives of other ethnic groups (Praxis 2015). According to Integration Monitoring, only a tenth of Estonians and less than a third of Estonian-Russians worked in collectives with mixed ethnic composition (where Estonians and Estonian-Russians made up approximately one half of the members) (Saar & Helemäe 2015). Different studies indicate that the reason is not the voluntary separation of Estonian-Russians. According to Integration Monitoring 2015, employers in Russian collectives were less satisfied with their jobs compared to employers in Estonian and mixed collectives. The correspondence between education and work is also quite low in collectives where Estonian-Russians dominate. The probability of getting a call-back to a hiring interview is much lower for individuals with Russian-sounding names than for candidates with Estonian-sounding names (Uudmäe 2012). Estonian-Russians (including gymnasium students) share an opinion that Russian-sounding names or Russian accent hinder employment success in the Estonian labour market (Aavik 2015; Kallas et al. 2013; MEIS 2013). Estonian employers also think that ethnic discrimination is a problem in the Estonian labour market and that it should be handled. However they do not think that it is the most serious problem (Plaan 2015).

Next we analyse vertical ethnic segregation in the Estonian labour market or segregation by occupational groups during the last 25 years (Figure 3). The vertical dissimilarity index dramatically increased at the beginning of the 1990s. It rose from a quite low level (11%) in 1989 to 19% and has now fluctuated to a level of 17-18%. The increase of segregation at the beginning of the 1990s was accompanied by changes in the characteristics of power relations in the transition period in Estonia (Pettai & Hallik 2002). Exclusion of Russian and rough implementation of Estonian-language requirements, along with the refusal to give Estonian citizenship automatically to all of the Soviet-period migrants led to uneven increases in segregation. In 2015 should approximately 15% of Estonians or Estonian Russians to change their occupational group so that differences in ethnic distribution by occupational groups would disappear. It is difficult to find comparative data calculated using the same methods for other countries. However, it seems that vertical segregation in Estonia is on a medium level. In most Western European countries vertical segregation has decreased (see for example Glitz 2014) but it is worrisome that in Estonia it has changed relatively little. Ethnic vertical segregation depends on the reference group: for example in Switzerland it is 17.2% for the first generation migrants, but for the second generation it is only 2% (Liebermann et al. 2014).

Figure 3.4.3. Ethnic segregation dissimilarity index, 1989-2015

Source: Authors’ calculation based on data from Statistics Estonia, ISCO classification

The distribution of ethnic groups by occupational groups reflects changes that have occurred. As shown in Figure 4, the proportion of white collar workers has increased over 25 years, but mostly among Estonians. It appears that the opportunities for Estonian-Russians to work as managers or professionals are substantially lower compared to Estonians. Since the beginning of the 1990s until today, the representation of Estonians in these occupational groups has been 1.5-1.7-fold higher compared to other ethnicities. During the economic boom at the beginning of the mid-2000s these differences decreased somewhat but the economic crisis in 2008, as well as emerging from the crisis, has been more successful for Estonians. Differences have stayed at the level of 11-13 percentage points during the last ten years. It appears there is a higher representation of Estonian-Russians among unskilled workers.

Figure 3.4.4. Distribution of ethnic groups by occupational groups

Source: Authors’ calculations based on data from Statistics Estonia

Changes in the educational system, first and foremost the transition to instruction in Estonian in higher education institutions in the 1990s, apparently contributed to the preservation of vertical segregation. As a result the share of higher education graduates among Estonian-Russian is lower than among Estonians especially in younger age groups: the transition from Russian-language gymnasiums to Estonian-language higher education institutions is complicated despite reforms in Russian-language gymnasiums. According to the Census from 1989, the share of people with higher education was higher among Estonian-Russians (12%) compared to Estonian (10%). This proportion among under-40-year olds had changed by 2000 (16% among Estonian-Russians and 18% among Estonians had higher education).

Additionally, previous studies have shown that the probability of being hired for a position that requires a lower level of education is greater for Estonian-Russians than for Estonians (Saar & Helemäe 2015). The difference is significant among people with higher education: in 2015, 5% of Estonians with higher education had a job for which they were over-qualified, among Estonian-Russians this share was 3-times higher (15%). This percentage reaches 12% even for Estonian-Russians with higher education and good proficiency in Estonian (Krusell 2016). This adversely affects the social status and well-being of Estonian-Russians with higher education, and also contributes to the ethnic vertical segregation of the Estonian labour market.

Impact of horizontal segregation on labour market inequality

Sociologists use the term ethnic penalty to identify ethnic inequality in the labour market (Heath & Cheung 2007). Ethnic penalty refers to the disadvantages that immigrants or ethnic minorities experience in the labour market compared with natives or the majority with the same general or country-specific human capital (level of education, working experiences) (cf Borjas 1985) and individual characteristics (eg. gender, age) (see Box 2). Discrimination is likely to be one major component of the ethnic penalties, although it must not be equated with discrimination per se (e.g. when employers prefer recruiting based on their own personnel’s personal networks, or the ethnic composition of the firm tends to reflect the ethnic composition of these networks).


Country-specific human capital, i.e. types of skills that are valuable in specific national labour markets, is an important dimension of human capital. Three groups of Estonian-Russians are distinguished according to the level of their country-specific human capital.

Estonian-Russians with poor Estonian language skills and without citizenship in the Estonian Republic make up a group with a low level of country-specific human capital.

Estonian-Russians having Estonian language writing skills and are citizens of the Estonian Republic belong to a group with a high level of country-specific human capital.

All other Estonian-Russians make up a group with medium level of country-specific human capital.

Presence or absence of ethnic penalty can be identified once general (level of education) and country-specific human capital, also age, gender and place of residence are taken into account. If the labour market position of Estonian-Russians with a large amount of country-specific human capital is unfavourable compared with that of Estonians with the same level of general human capital (level of education), we speak of ethnic penalties.

Data from ELFS 2011–2015 illustrates the disadvantaged labour market position of Estonian-Russians compared with that of Estonians (see Table 3.4.1, column “Labour Market”). The presence of ethnic penalty is revealed for Estonian-Russians with a high level of country-specific human capital. A high level of Estonian language proficiency and Estonian citizenship should enable them to compete with Estonians on equal terms; nevertheless their chances of attaining high occupational (managerial or professional) positions or of belonging to the top quintile of earners tend to be lower compared with ethnic Estonians. Ethnic penalty also manifests in a risk of unemployment and perceived over-qualification. It holds true for all Estonian-Russians in the 25-59 age group, as well as for those with only a high level of country-specific human capital.

Table 3.4.1. Labour market position of Estonian-Russians compared with Estonians1

25–59-year old Estonian Russians as compared to the Estonians
  Fields of activity
Labour market Estonian segment Mixed segment Russian segment
High position All EV2 ET4 +5 ET ET
SRK3 ET + ET +
High salary All ET ET ET ET
25–34-year old second and third generation Russian immigrants as compared to their Estonian peers
  Fields of activity
Labour market Estonian segment Mixed segment Russian segment
High position All EV2 ET V6 ET ET
High salary All ET V ET ET

Source: ELFS 2011–2015, Authors’ calculations.

1. Table is compiled using logistic regression models controlling for level of country-specific human capital, level of education, gender, place of residence and age group.

2. All ER – all Estonian Russians regardless of level of country-specific human capital.

3. HCHC – Estonian Russians with a high level of country-specific human capital (able to write and speak in Estonian, Estonian citizens).

4. EP – ethnic penalty, i.e. Estonians have better chances than Estonian-Russians.

5. EO equal chances (Estonian-Russians’ probability of holding managerial or professional positions or of belonging to the top quintile of earners does not differ from that of Estonians).

6. + Estonian-Russians have better chances than Estonians.

According to the segmented labour-market theory, ethnic penalties arise because of the unfavourable characteristics of a job (located in certain industrial sectors) rather than differences in worker skills and attributes. Therefore the ethnic penalty of Estonian-Russians might be partly explained by restricted access to industrial sectors that confer significant advantages to their employees.

Next we explore, how and to what extent horizontal (industrial) segregation contributes to vertical (occupational) segregation and inequality.


The labour-market position of Estonian-Russians in the Estonian labour market (i.e. presence or absence of ethnic penalties revealed in three labour-market ethnic segments) was analysed, based on ELFS 2011–2015 data. These segments were distinguished based on data on representation of Estonian-Russians in the industrial sectors of the Estonian economy. To determine the degree of representation, we compare the proportion of Estonian-Russians employed in a given industrial sector with the proportion of Estonian-Russians among all employed. One (1.0) symbolizes ‘perfect’ proportional representation, more than 1.0 designates a degree of ‘over-representation’ of Estonian-Russians, and less than 1.0 indicates their ‘under-representation’.

Mixed labour-market segment – industrial sectors with almost perfect representation of ethnic Estonians and Estonian-Russians (almost perfect means in this study 0.75–1.25).

Labour-market segment of Estonians – industrial sectors where Estonian-Russians are under-represented (their representation makes up less than 0.75 in their proportion among all employed).

Labour-market segment of Estonian-Russians – industrial sectors where Estonian-Russians are over-represented (their proportion in relative activity makes up over 1.25 in their proportion among all employed).

Horizontal segregation contributes to ethnic inequality when certain (usually native or majority) ethnic groups are concentrated in industrial sectors with favourable working conditions, while others are over-represented in the unfavourable industrial sectors. According to ELFS 2011–2015, in line with the theory of the segmented labour market, in the Estonian-Russians’ labour market segment there are lower (compared with Estonians’ and mixed segments) chances of labour market success in terms of high occupational positions and being in the top quintile of earners, with a higher risk of being perceived as over-qualified. In industrial sectors where Estonian-Russians are over-represented, the risk of unemployment is higher compared with the Estonian segment, being the same as that of the mixed segment.

Our analysis shows that ethnic penalty does not disappear when ethnic segmentation of the Estonian economy is taken into account, suggesting that unequal distribution of Estonians and Estonian-Russians between labour market segments is only part of the explanation. The extent of ethnic penalty differs across ethnic segments of the labour market, although Estonians have better chances of being in the top quintile of earners (see Table 3.4.2, columns “Labour market segments”), as well as better chances of avoiding over-education and unemployment compared even with Estonian-Russians with a high level of country-specific human capital. Estonian-Russians with the lowest country-specific human capital have the weakest labour market position in all ethnic segments. The good news is that Estonian-Russians, especially those with a high level of country-specific human capital (i.e. having Estonian language writing skills and being citizens of the Estonian Republic) have a good chance, even better compared with Estonians, of occupying high occupational positions in the Estonian segment, i.e. industrial sectors with the best working conditions.

Thus, the presence of the overall (i.e. average for all ethnic segments) ethnic penalty that is experienced by Estonian-Russians with a high level of country-specific human capital, is partly explained by their under-representation in the advantageous ethnic Estonian labour-market segment.

Ethnic segregation of the labour market across immigrant generations

In theory, children of foreign-born immigrants, i.e. second generation children, should have the same chances and opportunities to succeed in the labour market as children of native-born parents. The outcomes of the labour-market integration of the second generation might be viewed as the basis for determining the success of the country’s integrational policies. In Estonia the very meaning of the term second generation differs from that in Western Europe or North-America. The restitution of the ethnic nation state brought about deep changes in ethnic relations. Legal requirements for accessing many labour market sectors were established and all those active in the labour market by this time, regardless of immigrant generation, were expected to adapt to these requirements. Therefore, we consider all these Estonian-Russians to be first-generation immigrants.

The notion of second-generation can only be applied to that portion of second-generation Estonian-Russians who were socialised and attained their education in the restored Estonian Republic. With some reservations we consider 25-34 year olds to be grown-up (having accumulated their human capital and started their work careers) in the independent Estonian Republic. In this study, to assess the relative labour-market position of 25-34 year old second- and third-generation Estonian-Russians, their position is compared with that of their ethnic Estonian counterparts. This helps in making some suggestions about the future of ethnic segregation in the labour market, for example, whether generational change per se might significantly decrease it.

According to the ELFS data, Estonian-language proficiency and Estonian citizenship turn out to be important competitive advantages for ethnic Estonians in the labour market. Only half of 25-34 year old second- or third-generation Estonian-Russians, i.e. of those born in Estonia and becoming independent here, and were able to both speak and write in Estonian, and only 2 out of 3 were citizens of the Estonian Republic. Thus, according to this data, only 1 out of 2 of second- or third generation Estonian-Russians has a high enough level of country-specific human capital to compete on an equal footing with their ethnic Estonian counterparts.

With regard to level of education, ethnic Estonians also have some competitive advantage over their second- or third-generation Estonian-Russian counterparts: among Estonians 39% of the respective age group has higher education, while this level of education was obtained by 32% of second- or third-generation Estonian-Russians. This ethnic difference is smaller among 35-49-year olds, meaning that ethnic inequality in Estonian society has increased. This is bad news as educational inequality tends to be reproduced across generations.

Second- or third-generation Estonian-Russians are under-represented in the Estonian labour-market segments to the same extent as all older Estonian-Russians. The good news is that young second- or third-generation Estonian-Russians are concentrated less than 35–49-olds in the Russian labour-market segment. This is due to the fact that young Estonian-Russians are to a greater extent compared with the older Estonian-Russians represented in the mixed-labour market segment.

Despite the fact that horizontal segregation has decreased first of all among young people, young second- or third-generation Estonian-Russians with high level of country-specific human capital experience ethnic penalty: they have lower chances, compared with Estonians, of attaining high occupational positions (see Table 3.4.2 “Labour market”, also e.g. Saar & Helemäe 2015) and to be in the top quintile of earners.

The difference in labour market outcomes between young Estonian-Russians and their ethnic Estonian counterparts varies according to the level of the country-specific human capital of Estonian-Russians, but also across the labour market’s ethnic segments (see Table 3.4.2 “Labour market segments”). A positive sign is that those Estonian-Russians, especially the young second- or third-generation, who succeed in accessing the ethnic Estonian labour-market segment, are able to compete with their Estonian counterparts: they have equal chances with Estonians to attain high occupational positions and to earn a high income.

Second- or third-generation Estonian-Russian youth with a high level of country-specific human capital have the same chances as young Estonians to have top-level jobs also in the mixed labour-market segment. The same group of Estonian-Russians has clear advantages compared with their Estonian counterparts for attaining managerial or professional positions or of belonging to the top quintile of earners even in the Estonians’ segment. The conclusion regarding the whole age group of 25–59-year olds also holds true for the second- or third-generation Estonian-Russians of the same age. The state has an important role to play in decreasing ethnic inequality, because inequality is largely brought about by barriers to accessing the advantageous Estonian labour-market segment, including the public sector.


The results of the study show that while horizontal ethnic segmentation in the labour market has decreased, barriers between the ethnic segments of Estonians and Estonian-Russians still exist. Several studies have pointed out the challenges related to the ethnic separation between these work collectives.

Ethnic segregation by occupations is not very high in Estonia, but in contrast to horizontal segregation, which had decreased after significant increases during the 1990s, this has not taken place with regard to occupational segregation. Instead, up and down fluctuations have been evidenced. Nevertheless the level of ethnic segregation measured in this way does not seem to be an issue per se. What is worth special attention with regard to ethnic segregation is how horizontal segregation contributes to the persistence of vertical ethnic segregation.

It is first of all about the connection between the quality of jobs and the ethnically-biased concentration of ethnic groups in respective sectors. The results of this study show that it is the ethnic Estonian (not mixed) labour market segment where chances to make a career and to earn a high income are the best, while the risks of becoming unemployed or of being perceived as over-qualified are the lowest compared to other two segments. This apparent unequal treatment might be an issue not so much with regard to promotion but rather in more general terms, particularly with regard to accessing the Estonian segment.

The 25-34 year old second- or third-generation Estonian-Russians with high country-specific human capital employed in the ethnic Estonian labour-market segment have the same chances as their Estonian counterparts to work in a high occupational position and to earn a high income, i.e. they do not experience ethnic penalty. Nevertheless these young Estonian-Russians are under-represented in this advantageous ethnic Estonian segment. Thus, the more favourable labour-market position of Estonians, compared to Estonian-Russians, is partly explained by their concentration in the industrial segments with higher-quality jobs, including the public sector. It is possible for the state to reduce ethnic inequality in the Estonian labour market, if effective measures to ensure the equal access of Estonian-Russians to these sectors were to be implemented (for concrete suggestions see e.g. Kallas et al. 2013).

The Estonian state or local administrations employ about half of the workers of the Estonians’ sector, meaning that the state has direct opportunity to decrease barriers to the access of Estonian-Russians to these sectors. Previous research shows that limited contacts with Estonians and barriers to joining the ethnic majority’s social networks contribute to the persistence of ethnic segregation, decreasing chances for well-educated Russian-speakers who are proficient in the Estonian language to improve their labour market position (for example Toomet 2012). Social networks (including inter-ethnic ones) are very unequal with regard to their ability to support the labour market success of their members.

According to the Civil Service Act, which entered into force in 2013, a vacant post in public administration should be filled by way of public competition. Implementation of this Act should decrease the potential impact of the social networks in providing access to civil service jobs. The importance attached to the principles of representative bureaucracy is also of great significance, i.e. it matters to what extent fluency in Russian and being familiar with the mentality of Estonian-Russians and their needs might be considered as an important area of competence for filling certain civil service positions.

Unfortunately, the requirements established for proficiency in the Estonian language for civil servants are so strict that almost half of the second- or third-generation Estonian-Russians who obtained their qualifications in the educational system of the independent Estonian Republic are not able to meet these requirements. Assuming a continuation of current trends, the barriers between the ethnic segments are unlikely to disappear soon. Division of the Estonian educational system into two language-based streams does not support the emergence of persistent inter-ethnic social networks that might in the long run help young Estonian-Russians get access to ‘useful’ (in terms of labour-market success) social capital. To be able and motivated to attempt entry into the Estonian labour-market segment, young people just leaving the educational system and having no access to ‘resourceful and influential’ Estonian social networks, would benefit from more flexible entry requirements, e.g. opportunities to upgrade Estonian skills in an Estonian-speaking work environment during an adaptation period or to take advantage of language support.

All in all, the state has a lot of relevant levers with which to reduce ethnic inequality in the Estonian labour market, most important among them being:

1) in the long term to reduce language-based separation within the educational system;

2) in the short term to support acquisition of country-specific human capital on the part of young Estonian Russians.


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