Young People Who Have Worked Abroad and Their Success in the Labour Market

Introduction

The expansion of the European Union towards the East in 2004 removed obstacles to the free movement of labour between the new and old Member States of the European Union. However, emigration is not always planned as permanent or final when leaving a country. For many residents of Estonia, the free movement of labour was a chance to work abroad for a while, earning a better salary, and return to the homeland later. This type of migration includes short-term labour migration, commuting and seasonal employment, usually referred to as temporary migration.

Several studies published in recent years have been focused on the topic of people who have returned or re-migrated from abroad (termed ‘return migrants’). Most of the studies focused on a specific country, looking at how the work experience obtained abroad relates to managing on the job market of the country of origin after returning, for example in terms of the salary earned or the opportunities of finding work (Dustman 2007; White 2014). It is remarkable that the rate of returning to Estonia is one of the largest in Europe (Zaiceva & Zimmermann 2014). Whether we look at the people who have moved abroad permanently or temporarily, the share of young people is significant in both groups (Kahanec & Zimmermann 2010). In earlier studies, return migrants have usually been viewed as one group; therefore there is less information specifically about young people who have returned. This is, thus, an important gap in our present knowledge, with a study by Iara (2010) being a significant exception. The aim of this chapter is to try to fill in to some extent this gap in our understanding of the migration process.

Earlier research has shown that open borders increase the mobility of labour, broadening the opportunities for companies to find workers as well as the opportunities of employees to find work. Such mobility of labour also has a positive effect on the economy, increasing the flexibility of the labour market. It is natural that young people are more likely to travel than the older generation, as they are more ready to take risks. The young are more likely to accept employment abroad because often they have no real estate, children, steady jobs or other hindering factors to keep them tightly connected to the home country. Thus the first question we look at in this chapter is whether Estonian young people are ready to leave Estonia temporarily, to use the opportunities in the European Union common labour market created by the opening of borders to look for better job opportunities abroad.

There is another trend in professional literature stressing that not all people are equally prepared to seek employment abroad. For example, the greater mobility of people with higher education is stressed, as their skills and knowledge are easier to transfer across borders. In other words, they are more valued on the employment market of the destination country compared to the country of origin, and it is easier for them to find employment that suits their skills in the destination country. This leads to the second question of the study: how do young people who have temporarily left their homeland differ in socio-economic characteristics from their peers who stay?

The impact of temporary employment abroad on the subsequent success of young people on the employment market is an important issue in handling various labour-market-related problems of youth, like the relatively high unemployment rate of young people, their transition between various stages of the labour market (e.g. from studying to working), the fallout from the 2008 economic crisis, etc. Earlier research has shown that the impact of working abroad on the salary earned after returning and the outlook on finding a job may not always be completely positive. Thus the third question of our study is: are young people who have worked abroad able to earn more after returning home because of the experience they have obtained, compared to young people who are similar across various characteristics, but have not been temporarily employed abroad.

Emigration, the Relative Importance of Young People in Migration, and the Destination Countries of Migration

Figure 2.4.1 shows that the emigration of active members of the workforce from Estonia increased significantly in the years after joining the European Union. Young people in the 15-35 age group made up a significant share of the emigrants: 42% and 39% of all emigrants respectively in the years 2004 and 2012. Young people are probably most often defined as the age group 18-24 (for example, by the International Labour Organization, the OECD, the Statistics Board of the European Union Eurostat), but in this study, we look at a broader group, 15-35. This will ensure, for instance, a sample of returned young workers that is better suited for our analysis. Especially when analysing their employment, it should be kept in mind that in this group, unemployment may be up to three times higher than in the general population (Radu & Martin 2012). This definition of young people has also been used in earlier studies analysing the behaviour of younger workers in the labour market and their success in it (Kew et al. 2013).

Figure 2.4.1. Number of emigrants in the years 2000-2014, shown separately for the age group 15-34 and for the total population.

Source: Statistics Estonia

In the case of Estonia, temporary emigration is a widespread phenomenon, being one of the largest in Europe, after Slovakia and Lithuania (according to Eurobarometer 2010). Studies have shown that compared to other European countries, emigrants from Estonia are more likely to return to their homeland (Zaiceva & Zimmermann 2014). There may be various reasons for returning, including the personal characteristics and skills of a person (e.g. ability to adapt), their opportunities on the Estonian labour market, the situation of the family, the strength and nature of their ties to Estonia, etc. However, return migration may also be part of the initial emigration plan or it may depend on the savings accumulated while abroad.

For years, the most important destination country for emigrants from Estonia has been Finland (see Figure 2.4.2). It is noteworthy that the relative importance of Finland in terms of young people emigrating from Estonia grew from 17% to 38% between 2004 and 2012. Finland is even more attractive as a destination country for emigrants aged 36 and older, out of whom almost half was working in Finland in 2012. Working in Finland is popular for a number of reasons, certainly including its geographical proximity and the strong linguistic, historical and cultural ties between the two countries, but also the fact that there is already a large and growing community of Estonians in Finland (see also Vihalemm 2017, in this EHD Report).

Figure 2.4.2. Main destination countries of emigrants from Estonia in 2004-2012, in the age groups 15-35 and over 36

Note: The percentage shows the proportion of people working in the specific country out of the total number of people working abroad. All people employed abroad have been taken into account, those who have been working abroad and then returned to Estonia as well as the persons staying abroad permanently.

Source: Data from CV Keskus.

Considering that young people are more mobile, while also facing difficulties in finding work at home, working abroad should have fewer negative economic, emotional and psychological consequences for them. The costs related to temporary migration, for example the salary income not earned at home because of leaving, are smaller for young people because of their higher unemployment rate in Estonia. Also, the psychological problems related to working abroad are probably less significant for the young than they are for older people. Further, temporary emigration with a plan to return eventually (e.g. so that the children could grow up in the environment of their mother tongue) may well be the natural choice for many young people.

Whether this is true or not has been studied on the basis of the panel data of Estonia’s Labour Force Survey for 2007-2013. In that dataset, a returned person is someone who lived and worked in Estonia during the survey, but had been working abroad for at least one quarter in the last two years (this is the period for which a person’s labour market history is available). The results do show, as expected, that the average age of return migrants is lower than that of people who have not worked abroad, 41 and 45 years respectively, but the return migrants are older than the people who were living in Estonia during the survey, but were employed abroad (age 39).

Characteristics and Salary of Young Return Migrants

Two data sources have been used to find out who the returning young people are: panel data from the Estonian Labour Force Survey for 2007-2013 and the data from the Population and Housing Census of 2011 (population census) along with data from the Tax and Customs Board concerning social security taxes in the years 2006-2011. Return migrants are defined more broadly in the census data than in the Labour Force Survey, and include all young people who had stayed abroad in the last five years for work or other reasons. It can be said that in the Labour Force Survey, the situation of the returned labour migrants in the Estonian labour market is studied in a more narrow perspective, while the census looks at the situation of all return migrants in the labour market. There are a lot of people in the 15-34 age group whose migration was not work-related (e.g. family, studies); therefore the two groups, i.e. labour migrants and all migrants, differ considerably, and this should be kept in mind when interpreting the results.

Table 2.4.1 characterises both groups of emigrants. According to the data from the Labour Force Survey, 72% of the returning young people were male, while according to the census it was just 46%. Similarly, the Labour Force Survey says that 39% of the young return migrants were married, while according to the census it is just 29%. These results are not surprising because the Labour Force Survey includes only those who have travelled abroad for work (labour migrants). Men are more likely to travel because of work. The return migrants who were abroad because of work are also more likely to be married than those who stayed abroad for other reasons.

Table 2.4.1. Portraits of a returned migrant and one who has not worked abroad

1. In the case of returnees, returning in the first quarter is measured.

2. The emigrants who are presently abroad have been defined as persons who worked abroad at the time of the survey, but live in Estonia; they can be discerned only in the dataset of the Estonian Labour Force Survey. People without an experience of working abroad have been referred to as the ‘stayers’ or as those who have not worked abroad.

3. The white-collar group includes managers, top specialists, technicians and middle managers, officials, service and sales workers.

4. The ‘blue-collar’ group includes skilled workers in agriculture, forestry, hunting and fishing, other skilled workers and artisans, machine and equipment operators and assemblers, unskilled labour.

The education of the returnees also differs in the two datasets. According to the census, the proportion of people with a higher education was significant among the returning young people (44%), while the Labour Force Survey says that among the young people who worked abroad and returned, few (14%) have a higher education. Again, the difference is caused by a broader definition used in the census dataset of returning young people, especially because those who were studying abroad are also included in the return migrants’ group. Specifically, earlier research has shown that out of those who have emigrated from Estonia for non-work-related reasons, the majority are students and thus their education level when returning to Estonia is higher than that of labour migrants.

Still, both datasets show that, as can be expected, the returning young people differ significantly from those who had been living in Estonia permanently as well as those who live here, but work abroad (e.g. in Finland). Compared to people who had not worked abroad, relatively more were married among the returned young people (39% and 31% respectively according to the Estonian Labour Force Survey and 29% and 17% according to the Population and Housing Census of 2011). Both datasets show that the young people who have returned from abroad earn a higher salary than those who have not worked abroad. According to the Estonian Labour Force Survey, the average salaries were respectively 638 and 574 EUR, while in the dataset of the Population and Housing Census, they were 929 and 782 EUR respectively.

Young people who left Estonia for work take up simpler jobs after returning (for example, 66% of them work at blue-collar jobs) compared to all workers in Estonia (of whom 59% have blue-collar jobs). In the dataset of the census, however, an opposite tendency can be found: 48% of all returned young people work in blue-collar positions. The difference is caused by the fact that the group of all return migrants includes a significantly higher percentage of highly-educated persons than the group of labour migrants. The reason why there are so many people from Estonia working in blue-collar positions is that while blue-collars tend to migrate more, it is also true that people who used to have white-collar jobs in Estonia tend often to take up blue-collar jobs abroad.

Earlier research has shown that temporary employment abroad does not necessarily help in finding a better job and higher salary back home. It is true that the improved skills, expertise and the experience accrued should be beneficial for the employee. Not all employers, however, evaluate the experience of having worked abroad as a positive thing. On the contrary, it may mean for some of them that the person’s migration plan failed and he or she had no other alternative but to return home. In earlier studies conducted in Estonia, employers had pointed out the hazard that people who return from abroad have expectations of a higher salary, and that they are more likely to return to working abroad. The topic has been explicated on the basis of the Labour Force Survey data related to premiums and penalties on earnings.

A salary premium is a situation where having worked abroad helps the employee to increase his or her salary after returning. Data from the Estonian Labour Force Survey 2007-2013 have been analysed, using the salary premium related to return migration, to investigate the differences between the average monthly wages of people who have returned from abroad and those who have not worked abroad. Various parameters characterising the person’s background were also checked (age, education, marital status) as well as those characterising the job position (e.g. business sector, company size, ownership form). The results showed that although on the average the returnees earn more than the ones who have not worked abroad, the salary premium is 14% among the young (age group 15-35) and just 4% in the older age group. Thus, it may be that young people gain more from returning to Estonia.

Summary

The goal of this paper is to shed light on young people’s employment abroad. Earlier results (Tverdostup & Masso 2016) have shown that compared to the older age group, young people are more likely to stay abroad temporarily. This is true whether we look at staying abroad temporarily solely for working or in a broader perspective, including non-work-related purposes (like obtaining an education abroad). The characteristics of young people who have returned were brought out in the chapter as well as their salary premiums after returning, compared to peers who have not been employed abroad.

Study results confirm that compared to the older age group, young people settle down abroad more often, whether for work or for other reasons. The second question of the study was: what are the characteristics of a typical returned young person? It is noteworthy that regardless of their educational background and the experience and expertise obtained abroad, the returnees tend to work at lower positions than their peers who have never been employed abroad. The labour migration of people from Estonia is largely related to low-skilled jobs, for which the salary level in Estonia’s employment market is especially low. In other words, abolishing restrictions to the free movement of labour in the European Union makes it easier for these people to find employment abroad. Men, especially, have started using this opportunity.

The third question of the study was: how does working abroad influence a person’s salary level after returning? Interestingly, previous studies show that working abroad is not correlated with better work-related opportunities for young people, at least not immediately after returning. This is a significant problem in integrating the young people who have arrived back in Estonia into the labour market, because a better job position as a result of developing one’s career generally means a higher salary as well as better social status and opportunities for self-fulfilment.

On the positive side, the salary does, nevertheless, rise after returning to the homeland from working abroad. The salary gain after returning does not seem to mean an automatic advancement in the job position compared to the time before migration. It is especially the young people who earn significantly more after returning from temporary employment abroad than their peers. There are gains from working abroad for older people too, but these are less significant than for the younger age group.

Thanks

The research leading to the conclusions presented in this chapter was funded by the project Strategic Transitions for Youth Labour in Europe – STYLE No 613256 of the European Union’s Seventh Framework Program. Jaan Masso would also like to thank the Estonian Research Agency’s Institutional Research Agenda IUT20-49 Components of Structural Change as the Factors of Productivity Growth in Catching Up Economies for funding.

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