nokia's labor inflows and outflows in finland - etla

INokia’s Labor Inflows and Outflows in Finland: Observations from 1989 to 2010

Raportit Reports

3 May 2013

No 10

* ETLA – The Research Institute of the Finnish Economy, [email protected]** ETLA – The Research Institute of the Finnish Economy, [email protected]

Mika Pajarinen* – Petri Rouvinen**

ETLA ETLA

Observations from 1989 to 2010

Nokia’s Labor Inflows and Outflows in Finland

Suggested citation: Pajarinen, Mika & Rouvinen, Petri (3.5.2013). “Nokia’s Labor Inflows and Outflows in Finland: Observations from 1989 to 2010”. ETLA Reports No 10. http://pub.etla.fi/ETLA-Raportit-Reports-10.pdf

ETLA Raportit – ETLA Reports No 10II

Published as a part of the ongoing collaboration of BRIE, the Berkeley Roundtable on the International Economy at the University of California, and ETLA.

ISSN-L 2323-2447 ISSN 2323-2447 (print) ISSN 2323-2455 (online)

1Nokia’s Labor Inflows and Outflows in Finland: Observations from 1989 to 2010

Contents

Abstract 2

1 Introduction 3

2 Ourapproachanddataset 5

3 Personalcharacteristics 8 3.1 Labormarketstatus 8 3.2 Employeeage 9 3.3 Maritalstatus 11 3.4 Fieldofeducation 12 3.5 Levelofeducation 13 3.6 Occupation 14 3.7 Wagechangeduringaone-yearperiod 15 3.8 Wagechangeduringatwo-yearperiod 16

4 Organizationalcharacteristics 17 4.1 Industry 17 4.2 Firmsize 18 4.3 Firmage 19

5 Discussion 20

ETLA Raportit – ETLA Reports No 102

Nokia’s Labor Inflows and Outflows in FinlandObservations from 1989 to 2010

Abstract

Nokia’s ascent, dominance, and descent have resulted in significant labor inflows and outflows in Finland. In this paper, we document the aspects of these flows using official register-based data covering virtual-ly all individuals and organizations in Finland. Our setup may be compared to a laboratory experiment on the impacts of a single company on a country. During the 1990s, a large share of Nokia recruits were recent college graduates. Most of these recent graduates assumed various specialist and managerial positions at Nokia. During the 2000s, Nokia has been a good source of highly skilled labor for other businesses in Fin-land. More recently, an increasing share of former Nokia employees has been engaged with startups. Ad-ditionally, the proportion of former Nokia employees who have migrated to public sector jobs has grown.

Key words: Nokia, Finland, ICT, labor flows, employer-employee data

JEL: D21, J63, M51

Nokian työpaikkavirrat SuomessaHavaintoja vuosilta 1989–2010

Tiivistelmä

Nokia on toimintansa aikana ollut merkittävä sekä sisään- että ulospäin suuntautuneiden työpaikkavirto-jen lähde. Tässä raportissa tarkastelemme näitä työpaikkavirtoja monien eri taustamuuttujien avulla hyö-dyntäen Tilastokeskuksen rekisteripohjaisia aineistoja, jotka kattavat käytännössä kaikki henkilöt ja yrityk-set Suomessa. 1990-luvulla suuri osa Nokiaan tulleista työntekijöistä oli vastavalmistuneita tai opintojen loppusuoralla olevia opiskelijoita. Näistä useat työllistyivät erilaisiin asiantuntija- ja johtotason tehtäviin. 2000-luvulla Nokia on ollut huomattava työntekijöiden lähde yrityksille, jotka ovat rekrytoineet henkilös-töä korkeaa osaamistasoa vaativiin tehtäviin. Viime aikoina kasvava osuus entisistä Nokian työntekijöistä on perustanut uuden yrityksen tai muutoin työllistynyt alkuvaiheen yrityksiin. Myös siirtymät Nokiasta jul-kisen sektorin tehtäviin ovat lisääntyneet.

Asiasanat: Nokia, Suomi, ICT, työpaikkavirrat, työntekijä-työnantaja-aineisto JEL: D21, J63, M51


05

101520253035404550

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b. Nokia’s global handset market share, %(Data: Gartner)

0200400600800

1 0001 2001 4001 6001 8002 000

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a. Global handset salesMillions of phones p.a.(Data: Gartner)

-10112233445

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c. Nokia’s share of Finnish GDP, %(Data: Ali-Yrkkö, ETLA)

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Equipment manufacturing

Software, IT services

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Wholesale

1 IntroductionConsideringtherelianceofanationaleconomyononecompany,The Economist(August25,2012) concludes that “The importance of Nokia to Finland looks like a one-off [in globalcomparison].”1Nokiahasalsobeenaglobalforce:thecompanyledthemobilehandsetindus-trygrowingover40%annuallythroughoutthe1990s(Figure1.a),and,atitsheight,thecom-pany’sshareofglobalmobilephonedeliverieswasover40%in2006(Figure1.b).

AsaresultofNokia’sriseduringthe1990s,Finlandtransformedfrombeingoneoftheleastinformationandcommunicationtechnology(ICT)specializedcountriestobecomingthesin-glemostspecializedone(Koski,Rouvinen,&Ylä-Anttila,2002).2Duringtheearly1990s,thesuccessofNokiawasamajorfactorinpullingFinlandoutofthemostsevereeconomiccrisisinanyOECDcountrysinceWorldWarII.Duringthecompany’sprimefrom1998to2007,No-kiacontributedtonearlyaquarterofFinnisheconomicgrowth.Onthedownside,thereisnocomparisoninFinland’scorporatehistorytoNokia’sdescentsince2008:forexample,nearlyone-thirdoftheover8%dropintheFinnishGDPin2009isattributabletoNokia.

1 Economist. (August 25, 2012). One-firm economies: The Nokia effect. The Economist, 404(8799), 57. http://www.economist.com/node/215608672 Koski, H., Rouvinen, P., & Ylä-Anttila, P. (2002). ICT Clusters in Europe: The Great Central Banana and Small Nordic Potato. Informa-tion Economics and Policy, 14(2), 145–165.

Figure 1 The sectorial context of this paper


NokiahasbeeninstrumentalintransformingFinlandasacountry.Therecessionoftheearly1990swasawatershedbetweentheinvestment-andinnovation-drivenstagesofFinnishna-tionaldevelopment.InpartasaresultoftheriseofNokia,Finlandgrewtobecomeoneoftheforemostknowledgeeconomiesoftheworld.

Upuntilthemid-1980s,Finlandwasarelativelyclosedeconomy.By1993,theopening-upofthecountrybecamecomplete,whentheremainingrestrictionsontheforeignownershipwereremoved.NokiashowedFinlandhowtobecomeawinnerintheglobalplayingfield.Asare-sultof thecompany’ssuccess,Finlandand itscitizensgrewmore international,prosperous,andinformation-intense.Asfarasinternationalbusinesscirclesareconcerned,Nokiawaslit-tleFinland’stickettofame–globalrecognitionofthecompanyservedasadooropenerforFinnsinallwalksoflife.Nokia imparteditsemployeeswithhands-onknowledgeofhowtoconductlarge-volumebusinesstransactionsinvirtuallyallofthecountriesoftheworld.

AsFigure1.cshows,Nokiaaccountedfor4%oftheFinnishGDPin2000;thecorrespondingsharewasonlyhalfapercentadecadeearlier.In2012,Nokia’sshareoftheFinnishGDPwasactuallynegative.Thiscounter-intuitiveobservationcalls for furtherexplanation.WhenwecalculateNokia’s(includingNokia-Siemens Networks)valueaddedinFinlandasthesumof

– locallaborcosts,– localdepreciation,– localrents,and– theoperatingprofit(orloss)recordedinFinland,

weobtainasumwithanegativesign.AsfarasNokiaisconcerned,thisfigureisindeedap-proximatelythenumberusedtocalculatetheFinnishGDPin2012.Nokia’sgloballossesre-cordedinFinlandweightheavilyinthiscalculation.Fromatechnicalviewpointtheprocedureiscorrect:FinlandisNokia’sprofit-and-losscenterglobally–inbettertimestheoperationsinFinlandenjoy“excessprofits”andinworsetimestheysuffer“excesslosses”.3

BecauseFinlandisindeedNokia’smainprofit-and-losscenterglobally,theGDPshareofthecompanyfluctuatesmorethanseveralothermeasures.In2000,Nokiaaccountedfor1%ofthetotalemploymentinFinland.Nokia’scontributiontothecountry’stotalemploymentisstillinthe0.6–0.7%range.Furthermore,Nokia’sshareofbusinessenterpriseR&DinFinlandhasre-mainedrelativelystableatslightlyover40%throughoutthe2000s.

AsaresultofNokia’sbothnationallyandgloballyuniqueroleinbothquantitativeandquali-tativeterms,consideringtheconsequencesofthecompany’sascent,dominance,anddescentprovidesimportantlessons.Thispaperisourfirststepinuncoveringthoselessons.Ourpur-poseinthispaperistodocumentsomeofthebasicdimensionsofthedataonNokiaandtode-velopabasisforadiscussionoffurtherareasofanalysiswiththeinternationalresearchcom-munity.

OurquestforuncoveringlessonsarisingfromthehistoryofNokiaissupportedbyFinland’smostexceptionalofficialstatistics,inwhichthepathsofvirtuallyallindividualsandorgani-zationscanbetracedfromthecradletothegraveinconsiderabledetail.Forthefirsttimeinhistory,wehavebeengrantedpermissiontoidentifyinofficialstatisticsonecompany,Nokia,

3 This calculation nevertheless illustrates how current practices in determining the GDP of a nation-state are at times ill-suited for the current era of globalization.


andthecompany’sfuture,current,andformeremployees.Weareunawareofanypriorworkusingsimilardataorwiththesamestartingpoint.

Duringthe1990s,alargeshareofNokiarecruitswererecentcollegegraduates.MostoftheserecentgraduatesassumedvariousspecialistandmanagerialpositionsatNokia.Currently,No-kiaseemstobeagoodandappreciatedsourceofhighlyskilled,globallyorientatedlaborforotherbusinessesinFinland.TheindividualsdepartingfromNokiahavemostlyfoundmana-gerialandspecialistpositionsinotherlargecorporations.However,morerecently,thereisamarkedincreaseinthenumberofex-Nokiaemployeesworkingatstartups.

2 Our approach and datasetWeemployofficialregister-baseddataatStatistics Finland inourresearch.Inprinciple,ourdataformacompleterecordofallindividualsandallfirmsinFinlandovertheirlifespans.Toobtaininformationonindividuals,weutilizetheFinnish Linked Employer-Employee Database(FLEED)fortheperiodfrom1989to2010.

FLEEDcontainsdetailedindividual-levelinformationontheworking-agepopulationofFin-land(forexample:age,familyrelations,education,labormarketstatus,occupation,andwag-es).FLEEDalsoprovidesdataonemployment including the identificationcodeof theem-ployingorganization,whichcanthenbelinkedtodatainothercomprehensiveenterprise-lev-eldatabases.

WearegrantedpermissiontorecognizeNokiaandthecompany’semployeesforthepurposeofouranalysis.Intheremainderofthispaper,wetrackemployeeswhoworkedforNokiaatleastonceduringtheperiodfrom1989to2010.Usingthesedata,wecananalyzewhatanemployeehasperformedbeforeworkingatNokia,whattheemployeehasperformedatNokia,andwhattheemployeehasperformedsincedepartingfromNokia.

Figure2comparesNokia’semploymentnumbersfromFLEED(bars)toinformationonFinn-ishemploymentbythecompanyfromNokia’sannualreports(line).Themeasurementmeth-ods,includingthedefinitionofthetimingofemployment,arenotexactlythesame.Asare-sult,somediscrepancybetweenthesetwodatasourcesisexpected.Asseeninthegraph,thereare some discrepancies in the data for the period from 1989 to 1994. Otherwise, the head-countsinourdataseemtomatchthedatafromNokia’sannualreportsquitewell.Atthispoint,weareunabletoconfirmtheexactcauseofthediscrepanciesfortheperiodfrom1989to1994.However,thesediscrepanciesseemtorelatetotheconglomeratestrategythatNokiapursuedduringthe1980sandparticularlytothestructureofthecompany’stelevisionbusinessdivi-sion,forwhichNokiamadeseveralsizableacquisitionsduringthisperiod.Forexample,No-kiaacquiredSwedishLuxorin1984andGermanStandard Elektrik Lorenzin1987.Theseac-quisitionsandothernon-communicationsactivitieswerediscontinuedintheearly1990s.TheremainingpartsoftheTVbusinessweredivestedin1994.Presumably,someemployeesintheTVlineofbusinessweremovedtothe“core”ofNokia.BecauseourprimaryinterestisNokia’stelecombusiness,thissingularweaknessinourdatashouldnotbetooproblematic.


t-1

Inflows (t-1 not in Nokia, t in Nokia) Education and other employees’ personal

characteristics at year t-1 Industry and other firm characteristics at year t-1

Stock of employees staying in Nokia (t-1 & t in Nokia) Personal and firm characteristics at the time of first

recruitment

t

Outflows (t-1 in Nokia, t not in Nokia) Education and other employees’ personal

characteristics at year t Industry and other firm characteristics at year t

0

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Number of employees in Nokia’s annual report

FLEED

Ourapproachinthisdescriptivestudyisasfollows:Welookatthecharacteristicsofthoseem-ployeesenteringNokia(inflow),thoseemployeesdepartingfromNokia(outflow),andthoseemployeesthatremainemployedbyNokia(stock).Figure3illustratesthissetup.TheinflowisdefinedasthegroupofemployeeswhowerenotemployedbyNokiaatperiodt–1andwhowereemployedbyNokiaatperiodt.Similarly,theoutflowisdefinedasthegroupofemploy-eeswhowereemployedbyNokiaatperiodt–1andwhowerenotemployedbyNokiaatperiodt.ThestockineachperiodisdefinedasthegroupofemployeeswhowereemployedbyNokiabothatt–1andatt.

Figure 2 The number of Nokia’s employees in Finland according to FLEED (bars) and according to the company’s annual reports (line)

Data: Statistics Finland and Nokia’s annual reports. The authors’ calculations.

Figure 3 The setup of our analysis


Wedividethecharacteristicsofemploymentflowsintopersonalandenterpriseparts.

Personalcharacteristics:– Labormarketstatus(employed,unemployed,studyorequivalent,retired),– Age(under25years,25to29years,30to44years,45to59years,atleast60years),– Maritalstatus(single,cohabiting,divorced),– Fieldofeducation(technical,business,other),– Levelofeducation(PhD,master’s,somelowerlevelthanmaster’s),– Jobtitle(manager,specialist,clerical,production,other),and– Wagechange(increased/decreased,bothoverayearandtwoyearsbeforeorafterenter-

ingintoordepartingfromNokia).

Company-levelcharacteristics:– Sector(ICTmanufacturing,non-ICTmanufacturing,ICTservices,non-ICTbusiness

services,otherservices,publicsectorandother),– Companyage(under3years,3to5years,6to10years,atleast11years),and– Size(under10employees,10to49employees,50to249employees,atleast250employ-

ees).

Weconsiderfourperiods:– 1989to1994:Restructuringfromconglomeratetotelecommanufacturer,– 1995to2000:Intensegrowthcycle,– 2001to2007:Steadystate,and– 2008to2010:Crisis.

Figure4showstheaggregatelaborinflowstoandoutflowsfromNokiaduringthesefourperi-ods.Duringtheearly1990s,therewasasevererecessioninFinland.Duringthistimeperiod,Nokia streamlined thecompany’sbusiness focus fromadiversifiedconglomerate toapure-playcommunicationscompany.Thisrestructuringprocessresultedinover13,000employees

0

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1989-1994 1995-2000 2001-2007 2008-2010

Inflows Outflows

Figure 4 Employee inflows to and outflows from Nokia

Data: Statistics Finland. The authors’ calculations.


leavingNokia,whilenearly12,000newemployeesjoinedthecompany.SubsequentlyNokia’srecruitment intensifiedbecausethecompany’s telecombusinessgrewrapidly.From1995to2000,Nokiarecruitedover27,000employees,whilearound10,000personsleftthecompany.Aftertheintensegrowthcycleexperiencedduringthelatterhalfofthe1990s,businessgrewmoresteadily.From2000to2007,around14,000personsjoinedNokia,whileapproximately13,000leftNokia.Asaresultoftheglobalfinancialcrisis,certainindustrydevelopments,andinternalmishaps,Nokia’sfortunesturned.Consequently,from2008to2010,over7,000em-ployeesleft,whileonly4,000joinedthecompany.

Intheremainderofthispaper,westudylaborinflowsandoutflowsbyanalyzingpersonalandorganizational characteristics. All inflow and stock characteristics are determined at thetimeapersoneitherjoinsorleavesNokia.Thus,weleaveroomforfurtheranalysestostudy,forexample,whethertheprobabilityofanemployee’sdivorceishigherorlowerwhentheem-ployeeisemployedbyNokiaandwhetherorganizationsthatemployformerNokia employeessubsequentlyover-orunder-perform.Alloutflowcharacteristicsaredeterminedatthetimeofanemployee’sdeparturefromNokia.

Weprovideasimilarlystructuredfigureforeachoftheafore-mentionedpersonalandorgan-izationalcharacteristics.The“endcomposition”thatwereportfortheyear2010isbasedonthestatusesofemployeesatthetimeatwhichtheseemployeesjoinedNokia.Thus,wedonot,e.g.,accountformarriagesanddivorceswhileatNokia.Wewillreportthecompositionsofin-flowsandoutflowsforthefourtimewindowsdefinedabove(annualfiguresareavailableup-onrequest).

Becausecertaininformationmay,e.g.,beconditionalonremaininginemploymentafterleav-ingNokia,eachfigurealsoreportstheinflowandoutflowheadcounts.

3 Personal characteristics

3.1 Labor market statusFigure5illustrateslaborinflows,outflows,andthestockinthefinalyearwithrespecttoem-ployeelabormarketstatuses(thelowerandupperbarsshowinflowsandoutflows,respective-ly). Ineachperiod,overhalfof thenewrecruitswereelsewhereemployed immediatelybe-foreworkingatNokia.Thisproportionwasthelargest(74%)fortheperiodfrom2008to2010andthelowest(51%)fortheperiodfrom1995to2000.Theshareofrecruits,whowereun-employedimmediatelybeforejoiningNokia,was10%oraboveinthe1990s,butdecreasedinthe2000s.StudentshavebeenanotablesourceofNokia recruits,especiallyduringtherapidgrowthfrom1995to2000,whenover10,000studentsjoinedthecompanytotaling38%ofallnewemployees.Theshareofstudentinflowshasdecreasedinthe2000sandwasthelowest(19%)fortheperiodfrom2008to2010.OftheemployeesthatworkedatNokiain2010,six-tenthswereemployedelsewherebeforejoiningNokia,one-thirdwascollegeoruniversitystu-dents,andone-tenthwasunemployedimmediatelybeforejoiningNokia.

TheemployeeswhohavedepartedfromNokiaseemtohavefoundnewemploymentquiteeas-ily.However,duringtheongoingglobalcrisisfindingnewemploymenthasbeenmorediffi-cultforex-Nokiaemployeescomparedtootherperiods,e.g.,theearly1990satwhichtimeFin-


in in in in

out outoutout

19891994 19952000 20012007 20082010 Nokia’s structure in 2010

61%

7%

32%

Employed

Unemployed

Study

64% 51%65% 74%

13%10%

6%7%

23%38% 29% 19%

11 942 27 174 14 146 4 136

78%65% 68% 56%

10%15% 14% 29%

3%2% 3% 4%

9% 18% 14% 11%

13 432 10 716 13 240 7 350

RetiredNumber of persons joining and departing Nokia

landfacedadomesticfinancialcrisis.Duringtheperiodfrom2008to2010,roughlyhalfoftheemployeeswholeftNokia foundnewjobsimmediately,whereasintheearly1990s,asmanyasfour-fifthsfoundemploymentimmediatelyafterdepartingfromNokia.Consequently,theshareofunemployedex-Nokia employeeshasincreasedalmostthreefoldfromtheearlierpe-riodtothelaterperiod,eventhoughthesharesofindividualsleavingtostudy(11%vs9%)ortoretire(4%vs3%)remainquitestable.

3.2 Employee age Nokiahasrecruitedrelativelyyoungpeople,whichisespeciallynotablewhentakingintoac-countthelengthystudytimesinFinland.ThirtypercentofNokia employeesin2010wereun-der25yearsoldwhenrecruitedbyNokia,whereas60%werelessthan30yearsold.Only2%were45yearsorolderwhenjoiningNokiaforthefirsttime.Theshareofyoungrecruitswasthehighestduringthe intensivegrowthcycleduringthe latterhalfof the1990s,when64%ofnewcomerswereunder30yearsoldandalmost40%wereunder25yearsold.Incontrast,duringthefinaltwoperiodsunderstudy,theproportionofyoungrecruitsdeclined,whilethe

Figure 5 Nokia’s employment flows by labor market status

Data source: Statistics Finland. The authors’ calculations. Notes: Category “Study” also includes compulsory military serv-ice. The structure in 2010 is based on information on the first recruitment by Nokia.


share of more experienced individuals increased. From 2008 to 2010, roughly every fourthnewcomerwasbetween30to44yearsoldandtheshareofemployeeswhowerelessthan25yearoldsdroppedto14%.

The share of 30–44 year olds (at the time of departure from Nokia) departing from Nokia hasbeenthelargestoutflowforalloftheobservationperiods,rangingfrom39%inthelate1990sto58%infrom2008to2010.Theshareofdepartingemployeesunder30wasthehigh-estoutflowduringthelatterhalfofthe1990s(48%)andthelowestoutflowfrom2008to2010(16%).Notably,employeestypicallydepartfromNokiawellbeforereachingretirementage.Onlyonetofourpercentofemployeesdepartingfromthecompanyatanygiventimeare60yearsorolder.

in in in in

out outoutout


30%

31%

27%

2%

35% 38% 25% 14%

22%28%

26%25%

33%27% 33%

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13% 23%10% 5%

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024 years

2529 years

3044 years

4559 years

60+ years

Figure 6 Nokia’s employment flows by employee age

Data source: Statistics Finland. The authors’ calculations. The structure in 2010 is based on information on the first re-cruitment by Nokia.


3.3 Marital statusTherelativelyyoungagesofrecruitsisreflectedintheirmaritalstatuses.ThecompositionofemployeesatNokiain2010basedonmaritalstatusatthestartofemploymentwastwo-thirdssingle employees,30%marriedor cohabitingemployees, and3%divorcedorwidowedem-ployees.Theshareofsingleemployeeswasthehighestforbothininflows(69%)andoutflows(54%)duringthelate1990s,butthissharedecreasedthereafter.From2008to2010,theshareofsingleemployeesamongnewrecruitsandamongdepartingemployeeswas55%and36%,respectively.Thesharesofmarriedemployeesininflowsandoutflowshaverisenovertime.At3to4%ofinflowsandatnearly10%ofoutflows,theshareofdivorcedemployeeshasre-mainedratherstable.

in in in in

out outoutout


68%

29%

3%

Single

56%69% 63% 55%

38%28% 34% 40%

6% 3% 3% 4%

11 942 27 174 14 146 4 136

33%54% 43% 36%

57%39% 49% 55%

10% 7% 7% 9%

13 432 10 716 13 240 7 350Divorced

Cohabit

Figure 7 Nokia’s employment flows by employee marital status

Data source: Statistics Finland. The authors’ calculations. Notes: The structure in 2010 is based on information on the first recruitment by Nokia.


3.4 Field of educationForty-threepercentofNokia’semployeesin2010studiedtechnicalsubjectmatter,17%stud-iedbusinessorthesocialsciences,andtheremaining40%studiedothersubjects.Astructur-alshiftseemstohavetakenplaceovertime:theshareofrecruitswithtechnicaleducationalbackgroundsdroppedfrom50%duringtheearly1990sto42%from2008to2010.Incontrast,theshareofrecruitswithbusiness-relatededucationalbackgroundsincreasedfrom14%from1989to1994to25%from2008to2010.Theshareofoutflowingemployeeswithtechnicaled-ucationalbackgroundshasbeenapproximately50to60%ineachperiod.Theshareofdepart-ingworkerswithbusiness-relatededucationalbackgroundsincreasedfrom15to16%duringthe1990sto23%from2008to2010.

in in in in

out outoutout


43%

17%

40%

50% 45% 39% 42%

14% 15% 21% 25%

36% 40% 39% 33%

11 942 27 174 14 146 4 136

61% 51% 55% 59%

15%16%

21% 23%

24% 34% 24% 18%

13 432 10 716 13 240 7 350

Technical etc.

Business etc.

Other

Figure 8 Nokia’s employment flows by employee educational background



3.5 Level of educationOne-fourthofNokia’s employees in2010hadat leastamaster’s-leveldegree,and1%hadaPhDorequivalentdegree.Theshareofadvancedacademiclevelrecruitsincreasedgraduallyfrom22%duringtheearly1990sto56%from2008to2010.Theeducationallevelsofdepart-ingemployeesincreasedovertime.From1989to1994,22%ofdepartingNokia employeeshadamaster’s-leveldegree,whereasfrom2008to2010,theshareofdepartingemployeeswiththiseducationallevelwas62%.

in in in in

out outoutout


1%

36%

63%

1% 1% 1% 2%21% 29%

43%54%

78% 70%56% 44%

11 942 27 174 14 146 4 136

1% 1% 2% 3%21% 30%

48%60%

78% 69%50% 38%

13 432 10 716 13 240 7 350

PhD or eq.

Master of eq.

Other (lower)

Figure 9 Nokia’s employment flows by employee level of education



in in in in

out outoutout


4%

62%

15%

10%

9%

Production

Other (serv.)

5% 5% 5% 5%

53% 55% 54% 60%

18% 16% 15% 12%16% 11% 10% 8%8% 13% 16% 14%

886 932 3 389 2 217

4% 6% 15% 17%35%

49%

64% 59%12%10%

6% 8%43% 26%

8% 8%6% 10% 7% 7%

338 1 550 3 005 3 753

Specialist

Manager

Clerical

3.6 OccupationOurtime-seriesdataonemployeeoccupationsisnotasgoodasthedatafortheothercharac-teristics.Employeejobtitlesareavailableonlyfortheyearsof1995to1996,2000to2001,2005to2007,and2008–2010.Weneverthelessperformthesameexercise,whichuncoversastorycorrespondingtotheanalysisofemployeeeducationalbackgroundsdiscussedintheprevioussection.Thesharesofhighlyskilledoccupations,suchasprogrammers,designers,andbusi-nessandsalesprofessionals,haveincreasedinbothlaborinflowsandoutflows.From2008to2010, 60% of the previously employed recruits held specialist positions immediately beforeworkingatNokia.SpecialistswererepresentedinroughlythesameproportionamongthosedepartingfromNokia.

Figure 10 Nokia’s employment flows by employee job title (conditional on remaining employed)

Data source: Statistics Finland. The authors’ calculations. Notes: Different sub-periods. The structure in 2010 is based only on data relating to the first recruitment by Nokia of 2004 to 2010 recruits.


3.7 Wage change during a one-year periodThree-fourthsoftheNokiaemployeesin2010receivedpayincreasesuponjoiningthecom-panycomparedtothewagelevelsoftheseemployeesoneyearpriortojoiningNokia.(Here,wedonotstudylaterwagedevelopmentsatNokia).Theshareofincomingemployeesachiev-ingpayincreaseswasthehighestfrom1995to2000(75%)andthelowestfrom1989to1994(58%).From1995to2000andfrom2008to2010,two-thirdsofoutgoingemployeesleftforbetter-paying jobs. From 1989 to 1994, the share of outgoing employees leaving Nokia forhigherpayingjobswasthelowest(49%)ofalloftheperiods.

in in in in

out outoutout


75%

25%

58%75% 71% 67%

42%25% 29% 33%

7 131 12 527 6 928 2 217

49%69% 62% 68%

51%31% 38% 32%

9 896 5 980 7 698 3 753

Increased

Decreased

Figure 11 Nokia’s employment flows by employee wage increase during a one-year period (conditional on remaining employed)

Data source: Statistics Finland. The authors’ calculations. Notes: Wages have been deflated by the index of wage and sal-ary earnings. The structure in 2010 is based on information on the first recruitment by Nokia.


3.8 Wage change during a two-year periodTheanalysisofwagechangesintheprevioussectionmaybebiasedbybonusesandotherex-traordinarypayments.Thus,weperformed the sameexercise forwagechangesovera two-yearperiod.Thisnewanalysis increasestheshareofemployeeswhosewage level increaseduponjoiningNokia.NinetypercentofNokiaemployeesin2010receivedpayincreasesuponjoiningthecompanyusingthetwo-yearcriterion.Theshareofinflowsforthischaracteristicwasthehighest(88%)duringthelatterhalfofthe1990sandthelowest(66%)duringtheear-ly1990s.Notabledifferencesariseinthisanalysisforoutflowscomparedtotheone-yearwagechangeanalysis.Duringtheearly1990s,61%ofNokia’sdepartingemployeesreceivedpayrais-es(comparedto49%intheprevioussection).From2008to2010,wagesincreasedfor40%ofdepartingNokiaemployees(comparedto68%intheprevioussection).

90%

10%

in in in in

out outoutout


66%88% 86% 83%

34%12% 14% 17%

7 131 12 527 6 928 2 217

61%76%

58%40%

39%24%

42%60%

9 896 5 980 7 698 3 753

Increased

Decreased

Figure 12 Nokia’s employment flows by a person’s wage increase, over 2 years (conditional on remaining in employment)

Data source: Statistics Finland. The authors’ calculations. Notes: Wages have been deflated by the index of wage and sal-ary earnings. The structure in 2010 is based on information on the first recruitment by Nokia.


in in in in

out outoutout


20%

11%

16%

8%

28%

18%

ICT manuf.

Other services

Public sector etc.

47%28%

5% 2%

17%

13%

7% 6%

2%

8%

24% 31%

2%5%

11% 15%

15%24% 36% 32%

16% 21% 16% 13%

7 131 12 527 6 928 2 217

14% 18% 14%2%

55%20%

10%11%

1%

16%24%

22%

1%5% 11%

12%

9%17% 24%

23%

21% 24% 17%31%

9 896 5 980 7 698 3 753

ICT services

Non-ICT manuf.

Business serv. (exl. ICT)

4 Organizational characteristics

4.1 IndustryOvertime,Nokia’sbusinessemphasishasshiftedfrommanufacturingtowardsservices,whichisreflectedthroughtheoriginatingindustriesofthecompany’srecruits:theshareofrecruitsfrommanufacturinghasdeclinedfrom64%intheearly1990sto8%from2008to2010.Incontrast,recruits fromICTservices increasedfrom2%inthefirsthalfof the1990sto31%from2008to2010.

The shareofdepartingemployeesmoving toothermanufacturing firmshasalsodecreasedfrom69%intheearly1990sto13%from2008to2010.Manydepartingemployeesenterthepublic sector (which in our definition includes universities, public research institutes, andothernon-profitorganizations).Thesharemovingtothepublicsectorwasthe largestfrom2008to2010(31%).

Figure 13 Nokia’s employment flows by sector (conditional on remaining in employment)



HalfoftheNokiaemployeesin2010hadpreviouslybeenemployedinprivatesectorservices.In2010,one-thirdwaspreviouslyemployedinmanufacturing,whileone-fifthwasprevious-lyemployedinthepublicsector.Nearlyone-thirdin2010hadbeenrecruitedfromotherICTfirmseitherinmanufacturingorservices.

4.2 Firm sizeOverhalfofNokiaemployeesin2010werepreviouslyemployedbyanotherlargefirm(withat least250employees inFinland).Theshareof inflows fromlarge firmswas the largest intheearly1990s(74%),butthisshareofinflowshasgraduallydecreasedto50%from2008to2010.Duringthelattertimeperiod,theshareofmid-sizedfirmsasasourceofrecruitsgrewfrom12%to28%.Thesharesofoutflowsaresimilar to thesharesof inflows.Furthermore,from2008to2010,everyfifthemployeedepartedtoasmall(0to49employees)ormicro(0to9employees)firm.

in in in in

out outoutout


9%

14%

21%

56%

6% 10% 9% 8%8%14% 16% 14%12%17% 27% 28%

74%58% 47% 50%

6 018 9 936 5 755 1 924

4% 9% 10% 18%7%18% 15%

18%13%

20% 19%25%

77%53% 56%

40%

8 012 4 560 6 454 2 585

1049 empl.

50249 empl.

250+ empl.

09 empl.

Figure 14 Nokia’s employment flows by firm size (conditional on remaining in private sector employment)



4.3 Firm age Nokiahasprimarilyrecruitedfromothermaturecompanies(definedascompanieswhichareover10yearsold).Thematuresharewasthelargest(62%)intheearly1990s.Theshareofout-flowstoyoungercompanieswaslarge(64%)intheearly1990s,whichwasdrivenbydivest-mentsinNokia’snon-ICTbusinessesaroundthattime.Somebusinessesthatcontinuedundernewownershipsimplyreceivednewbusinessidentificationcodesandthusareconsideredtobenewfirms.4Inthesedata,wedonotobserveamarkedincreaseinthestartupactivitiesofdepartingemployeesduring2008to2010,whichiscontrarytothe“conventionalwisdom”inFinland.Recall,however,thattheNokia-relatedstartupboominFinlandtookplacein2011and2012,butthattheseyearsarenot(yet)includedinourdata.

4 There are alternative ways of defining a firm’s age, but here we employ the most commonly used alternative, i.e., counting the time since the official business identification code was granted.

in in in in

out outoutout


10%

16%

33%

42%

02 years

8% 10% 12% 11%18% 16% 19% 10%

12%43% 25% 32%

62%

31%44% 46%

6 060 10 096 5 843 1 951

64%34% 23% 15%

10%

17%21%

18%

10%

18%16%

19%

15%31% 40% 48%

8 049 4 610 6 562 2 646

35 years

610 years

11 years

Figure 15 Nokia’s employment flows by firm age (conditional on remaining in private sector employment)

Data source: Statistics Finland. The authors’ calculations. Notes: The structure in 2010 is based on information on the first recruitment of Nokia.


5 DiscussionInpartbecauseoftherelativelysmallsizeofFinland,Nokia’sdirecttangibleimpactonFin-landhasbeenhuge.Arguably,Nokia’sgreatestimpactonFinlandhasneverthelessbeenintan-gibleinnature:NokiaprovidedFinnishcitizenswithhands-onknowledgeofhowtosucceedinglobalbusiness.AsaresultofNokia’ssuccess,Finlandgrewmoreinternational,prosper-ous,andinformation-intense.

BecauseofthecharacteristicsofbothNokiaandFinlandaswellasduetobothdomesticandglobalturmoilinthesurroundingenvironment,thecontextinthispaperresemblesalabora-toryexperimentontheimpactofasinglecompanyonacountry.

In recent years, Nokia has reduced recruitment directly from colleges and universities. Thelevel of formal education obtained by Nokia recruits has nevertheless risen over time. Thedominanceofengineeremployeeshasdeclinedovertime.Particularlyduringthe1990s,No-kia recruitedrelativelyyoungpeople.Byand large,recruitshaveassumedvariousspecialistandmanagerialpositionsatNokia.

Duringthe2000s,Nokia seemstohavebeenagoodsourceofhighlyskilled laborforotherbusinessesinFinland.Typically,departingex-Nokiaemployeesseemtohavefoundemploy-mentinhigh-levelmanagerialandspecialistpositions.Morerecently,anincreasingshareofNokiaemployeeshasbeenemployedatstartups.Presumably,thistendencywillbemorepro-nouncedwhentheyears2011and2012areconsidered(yettobeaddedtoourdata).Duringthemostrecentperiod,thelevelofmigrationofex-Nokia employeestopublicsectorjobshasalsogrown.

Nokia’sascent,dominance,anddescenthavesignificantlyimpactedlaborflowsinFinland.Inthispaper,wehavedocumentedsomeofthebasicdimensionsoftheseflowswiththepurposeofengagingothermembersoftheinternationalresearchcommunityinthinkingaboutpossi-blefutureresearchandanalysisquestionsrelatingtoNokia’semploymentdata.Weareopentosuggestionsandlookforwardtofindingnewcollaboratorsandco-authors!


Elinkeinoelämän tutkimuslaitosThe Research Institute of the Finnish EconomyLönnrotinkatu 4 B00120 Helsinki

ISSN-L 2323-2447, ISSN 2323-2447, ISSN 2323-2455 (Pdf )

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