IN MOST EASTERN EUROPEAN countries and in the Baltics in particular, the job market is quite different from what we are used to in Scandinavia and in Sweden. This has to do with our economy’s stability and general long term view versus the rather fragmented and immature business world of Eastern Europe. In short, both employers and employees are more inclined to change and are faster than Swedes when it comes to making decisions in this area, particularly in management positions. However, remember that in this somewhat more rapid flow than we are used to, you may find gold. Below I’m making a job market comparison:
Scandinavia/Sweden |
The Baltics/Eastern Europe |
- Not changing jobs fast, discussions with family etc. |
- Relatively fast in changing jobs, fast decisions, more frequent changes |
- Stays 2-3 years or more with the same employer |
- Shorter time on the same job, wants a faster career |
- The employee is protected by labour market legislation |
- Same legislation, poor control and adaptation |
- Expect CV to be accurate and balanced |
- Expect CV to be distorted and subjective |
- Small salary and remuneration differentials |
- Significant pay differentials depending on position, education etc |
-Swedes don’t work overtime |
- East Europeans work overtime |
- Working for a foreign employer is seen as attractive as working for a local employer |
- Considered more meriting to have worked for a foreign company, a foreign boss |
- Unions present in workplace |
- Unions hardly exist |
- A long trial employment may be acceptable in Sweden |
- According to law, trial employment is short and fast decisions required about reaffirming the employment or termination of it |
- Partly or entire illegal pay rare |
- Illegal pay rather common |
- When recruiting: Rather formal process, merit oriented, recruitment and headhunting firms, advertising |
- More network oriented, personality driven, friendship plays big role, but this is changing |
- Recruitment firms common |
- Recruitment firms still rare |
THE CONCLUSION IS that, as a new Managing Director of a company in Eastern Europe, you should allocate time to hire key personnel yourself or choose professional head hunters. Your East European colleagues/partners may not choose employees by optimal criteria or even understand your criteria. At least make sure your local partner has a good selection of prospects when recruiting. A common mistake that Western entrepreneurs make when recruiting in the East, is to recruit someone with the same experience and qualifications as they expect in Sweden but at a bargain cost. Those days are over; you sometimes have to pay more in Eastern Europe. However, middle managers, factory workers and shop staff are less expensive in Sweden - so far…
THOSE OF YOU who are setting up business in Eastern Europe/the Baltics, please pay attention to all entrepreneurs and well educated people you will find. You may make the best recruitment in your entire professional life and find many versatile and skilled individuals for your organisation and network. You will find a distinct profile of do-it-all-men and wheeler-dealers and if you stay long enough in these markets, you become one yourself. Over the years, I have been fortunate to have colleagues with higher academic degrees than myself (Graduate Economist). They have been assistant professors, professors, ex-sport champions and many more. These days, those people are much more expensive to hire.
About the banking system and credit grants
It is hard to rank typical Swedish and East European phenomena. I will describe them like this:
SWEDISH BANKS ARE some of the most efficient in the world with the highest number of transactions and service activities per employee. Handelsbanken, for example, used to have a world record in this discipline. You cannot say this about the East European banks, but they are quite profitable. At the moment, a lot of financial services, previously unavailable, are slowly getting obtainable. Chose bank according to reputation, orientation and Eastern ownership. Some banks are set up to serve single large customers, who also own them! Services to small savings account customers and SME clients have not been à la mode, but it is changing now. Right now the banks are very busy with the mortgage boom in, for example, the Baltics and other Eastern countries. People are mortgaging their apartments and houses resulting in an enormous bustle. Differences to the Swedish banking system:
- Service in terms of number of bank employees is good
- However, service in terms of know-how is less good
- Many services are more expensive in the East. Fees are higher for both major and minor service products
- Credit lines or so-called overdraft, cost twice as much in the Baltic countries as in Sweden
- Checks have and will never be used in the East; it is considered out-of-date
- Internet banking is common place. Direct transfers are fast as opposed to Sweden, where it may take several days. The legislation is different for transactions
- Bank guarantee services are more expensive in the East and a better solution is insurance. It will freeze the guaranteed amount, a process that is very complicated
- Sometimes the local banks are not familiar with Swedish subsidiaries’ large, listed parent companies. When estimating credit risk they base it on the subsidiary’s balance sheet
- Credits in local Eastern currency are still more expensive than in Euro
- They will check your ID three times more than in Sweden. For example, if you have the exact same ID as when you registered the account
I WOULD RECOMMEND looking up a local Swedish/Scandinavian bank in connection with setting up business in Eastern Europe. It will not get much better, but the risk for major surprises is minimal.
IN PART 1 of my chronicle, I had a sentimental retrospect to reflect on the fast development during my Baltic years. This time, I would like the readers to look forward. Could a Baltic partner become someone to enter the Russian market with? How will you get a share of the Russian oil money? Many Swedes have gone all the way to the Middle East to take advantage of the oil capital markets. The Baltic countries, Russia and Ukraine are closer than you think. My advice is to match your company’s strengths with Baltic growth industry in closely related markets.
I HAVE WRITTEN this chronicle in the evenings, in my rented apartment in Riga, a General Major’s old privileged apartment in Riga let out by his widow. So, I’m back to being sentimental. When I mention the address to elder taxi drivers, they shiver. In the Soviet era, the General was the militia commander of the entire Soviet Republic of Latvia. According to people from that time, he didn’t like locking people up and hated his job as interior minister. When he was “in a good mood”, he used to sing arias from the balcony. In spite of the original state, the rooms are the best of the Soviet Union with a good aura. The apartment gave me inspiration to write and a daily contrast to the fast Baltic and Latvian journey into the future.
This chronicle is dedicated to all Baltic/Eastern Europe enthusiasts in Sweden and abroad.
Part 1 of "Stories of a Baltic veteran"
Part 2 of "Stories of a Baltic veteran"
Part 3 of "Stories of a Baltic veteran"
Jacob Lalander, business administration graduate, with 14 years in the Baltic countries and Eastern Europe. He runs a consulting company for purchasing and acts as contact agent in both directions Scandinavia/the Baltics/Eastern Europe in the construction industry and other industries. Apart from English, Jacob also speaks fluent Latvian and decent Russian. Part 2 and 3 as well as this part are excerpts from my lectures at the EC Education in Stockholm, course for Logistics and Trade with Eastern Europe, spring of 2007.