As Europe seeks to avoid the worst effects of its demographic winter, fresh approaches to work and immigration are opening up new pools of potential talent.
Europe’s talent shortages are a daily headache for any hiring manager or recruiter. Four major challenges have hit all companies at once. There’s the ongoing continent-wide demographic winter, a skills gap that’s particularly dire in technical and specialist spaces, shifting beliefs about the centrality of work during one’s life in younger generations, and the COVID-19 fueled “Great Resignation” that is accelerating retirements as well as regular departures. As a result, while companies struggle to hire skilled workers, national economies sputter.
To mitigate this problem and filled the skilled worker gaps, many countries are looking toward immigration as a solution. However, it is not simply a matter of “importing” talent on a just-in-time basis. People are not commodities. Even well-trained workers in the same fields cannot be swapped out, one for another, due to differences in personality types and cultural backgrounds, among other factors. Fortunately, some countries are experiencing good results by shifting their asylum, skilled visa, and governance structures to smooth the integration of new immigrants with companies and cultures so that everyone can benefit from the diversity, skills, and innovative power immigration brings. Here, examples from Iceland, Portugal, and Germany will be examined.
In 1998, Iceland was home to approximately 7,000 immigrants who contributed less than 2.5% of the country’s workforce. Yet with net additions to the native workforce of only around 5,000 per year, the country knew that any hope of economic growth would require a major shift toward accepting – and successfully integrating – additional immigrants. This was particularly critical in Iceland’s more rural communities, which were rapidly depopulating.
To make the change, the country centralized its placement and support systems, bringing the burden out of small municipalities and offering dedicated national resources for integration. As a relatively homogenous country, outsiders could struggle to fit into Iceland’s close-knit communities, but this nationally directed relocation support was helpful in navigating cultural barriers. Since many new migrants were categorized as unskilled labor, this relocation support also helped ease fresh arrivals through upskilling and training programs in ways that would have been difficult to administer at the local government level.
The results? Immigrants now make up nearly one-fifth of Iceland’s workforce, and have contributed to a boom in the construction and tourism industries throughout the country. As the policies proved resilient to COVID, Iceland plans to continue centralized delivery, monitored through a series of four-year Immigration Action Plans.
PORTUGAL: ENCOURAGING NOMADIC ENTREPRENEURS TO PUT DOWN ROOTS
Portugal has long been a welcoming destination for foreign retirees, particularly from Britain, and through its Golden Visa program made investment as a path to citizenship an open door to established earners from many countries. However, more recently, the country has focused new efforts on attracting a younger, more diverse group with entrepreneurial spirit by targeting digital nomads.
Lisbon was already popular on the digital nomad “circuit”, a global path which often included stops in Bali and Medellin. Yet most places encouraged these freelancers and e-commerce business owners to move on after a few months. Portugal took a different path, offering service centers to help with visa renewals and opportunities in smaller communities where freelancers could begin to feel “local” more quickly. When COVID entered the conversation, the country went even further, advertising extended stay opportunities and the safety of rural co-working hubs.
Is it working? Officials say yes. More than 2,000 entrepreneurs from more than 40 countries applied for a recent coworking opportunity on a remote Portuguese island, and residents note that the new arrivals often bring families with them to repopulate schools and engage in community causes. Plus, as nomads integrate, they’re less likely to ever leave, meaning their passion for starting companies and family-focused growth renews Portugal from the ground up.
GERMANY: INCENTIVIZING SKILLED LABOR TO CHOOSE GERMANY FIRST
By 2030, consulting firm KornFerry estimates that Germany will be looking at a skilled talent gap of some 3 million employees. The country’s own labor secretary estimates that some 400,000 net immigrants must come to the country each year to simply maintain existing business structures. Unfortunately, Germany must compete for skilled talent with every other developed economy in Europe, as well as fend off competition for skills from South Korea, Australia, and the US.
To incentivize skilled workers to choose Germany first, the country has been raising wages and adding points for skills to the national immigration program. Germany is also expanding skilled worker immigration programs for applicants who come in from outside the European Union, in an attempt to bring more diversity into the country’s labor force.
Is it helping? Yes, but more is needed. Currently, Germany is hitting about half of what it needs, with COVID having put a serious damper on skilled worker migrations. However, as COVID eases and new programs to allow certain skilled professions (such as doctors and nurses) to move directly into full employment come into force, there is hope that Germany will hit its goals thanks to its new flexibility and emphasis on foreign recruiting.
WILL UKRAINE CHANGE THE EQUATION?
It remains to be seen what effect the millions of new Ukrainian refugees will have on the immigration and labor policies described above. Will temporarily displaced workers join local labor pools and become permanent residents, helping to fill talent gaps on an ongoing basis, or will they choose to return to their former homes at the first reasonable opportunity, leaving vacancies behind them? Time will tell, and indeed, there will likely be many situational variations. Yet however that unfolds, the European nations that have established pathways for integrating outside talent and welcoming new arrivals are more likely to emerge as preferred destinations for refugees and traditional immigrants alike, boosting their economies and building competitive advantages for the future.