Competition for international talent – Sweden as an attractive land for professionals from abroad
Sweden is an attractive country for internationally mobile, highly qualified professionals, which is evident from the increased inflow to the country over the past decade. However, global competition for human capital is increasing and professionals in certain occupations can today be said to have much of the world as their potential labour market. In this study, Growth Analysis has analysed how attractive Sweden is for highly qualified professionals from abroad.
Through analysis of statistics, interviews with companies, literature studies and reviews of labour migration regulations in Sweden and abroad, we have reached the following conclusions:
A small but important part
The domestic work force is the main supply of human capital for employers in Sweden. Growth Analysis’ calculations show that, in 2015, employers in Sweden recruited around 50,000 highly qualified¹ workers who were new entrants to the labour market, i.e. coming from education, unemployment or abroad. Only about 5,000 of these were professionals from abroad. If one takes into account the inflow of foreign professionals working in Sweden on shorter assignments or projects, the number is considerably higher. Highly qualified professionals from abroad cannot be said to fulfil a particularly large part of the Swedish labour market’s long-term recruitment needs. However, they are important for growth for several reasons – for companies seeking niche, cutting-edge skills, for those recruiting to occupations experiencing a labour shortage, and to facilitate internationalisation.
Few labour migrants stay for a long time
Our analysis of the flow of highly qualified foreign professionals to Sweden shows a steady increase over the period 2010–15. The number coming from within the EU/EEA has been increasing faster than the number from third countries, i.e., the rest of the world. We also note that the number of third country nationals who receive a work permit from the Swedish Migration Agency is significantly higher than the number that registers as domiciled in Sweden. This means that many, from the outset, have planned to work in Sweden only for a short period. Both our study and previous research show that a large share of this group comes to Sweden on shorter assignments and that the length of their stay is not necessarily an indication that Sweden is not perceived as attractive. The majority of those who are here on short contracts are computer specialists who otherwise work abroad at Swedish multinationals’ foreign subsidiaries or subcontractors. They come to Sweden to acquire contacts and knowledge in order to streamline communication between headquarters and operations abroad.
Gender equality contributes to Sweden’s attractiveness
Highly qualified professionals from third countries usually work in the business sector, predominantly as computer specialists and engineers. In contrast, a significantly higher proportion of EU/EEA nationals work within the public sector. This can likely be explained by the many regulated occupations within, for example, the healthcare sector that generally hinder cross-border mobility. However, the mutual recognition of professional qualifications within the EU means that this is only a hinder for persons with qualifications from third countries.
Foreign professionals’ employment pattern on the labour market follows the same pattern of gender segregation as that of the domestic work force. More women than men work in the public sector and men constitute the majority of computer specialists and engineers. We have analysed the wage structure for professionals from abroad who stay in Sweden for at least one year (register as domiciled in Sweden). We find that, when it comes to foreign professionals from the EU/EEA, the wage structure does not deviate significantly from that of the native-born work force for comparable occupations. However, wage levels are somewhat lower for foreign professionals from third countries. This applies for both women and men. We also see that women make up an increasing proportion of the foreign professionals coming to work in Sweden from both the EU/EEA and third countries.
The positives and negatives for those who stay
Our review of the literature concerning how internationally mobile, highly qualified professionals perceive Sweden produces a mixed picture of the country’s attractiveness. The relatively lower salary levels, coupled with high marginal taxes, can in some cases be temporarily outweighed by the possibility of building up one’s CV, working in a dynamic IT environment or gaining experience from a multinational company’s headquarters. In other cases, lifestyle factors such as the environment and gender equality may tip the scales to the positive side. On the whole, Sweden offers an attractive package for those who choose to settle permanently in the country. It is particularly attractive for highly qualified women as the possibility of balancing a career and parenting is perceived as better in Sweden than in many other countries. In contrast, the difficulty in finding suitable housing is emphasised as a weakness.
The foreign professionals’ image of Sweden is largely in line with the picture that emerged during our interviews with employers. Both groups indicate that it is first and foremost the type of work available and career opportunities that attract individuals to Sweden, but also the Swedish corporate structure with its flat organisation. The companies interviewed concurred that striving for the highest possible level of gender equality and cultural diversity within organisations are success factors for creating attractive, stimulating and creative environments for their employees.
Uniform migration policy disadvantages professionals
In 2008, Sweden introduced new legislation for labour market immigration from third countries. As a result, that there is no longer any public authority-based labour market test. Instead, it is the employer that determines the need to look outside the EU’s borders to recruit the required competence. EU/EEA citizens do not need a work permit to work in other Member States.
Sweden has a uniform system for labour migration, i.e. the same rules apply for all categories of labour migrants, regardless of their level of education and professional qualifications. The regulations entail that work permits are granted initially for a maximum of two years. Furthermore the employee is tied to one employer and one occupation during the first two years. If the work permit is extended after the initial first two years, the employee may change employers but not occupation. It takes at least four years for all labour migrants (regardless of qualification level) to gain flexible access to the entire labour market, meaning that they no longer need to apply for a new work permit to change employer and occupation. This creates a sense of uncertainty about their future in the country.
Other countries are more restrictive in issuing work permits for occupations with low qualification requirements, mainly seeking to attract highly qualified professionals or workers within occupations experiencing a labour shortage. Many of comparable countries allow highly qualified professionals from abroad greater opportunities to change employers or occupations. Sweden is also quite unique in regards to the procedure of reassessing work permits and reviewing the employment conditions after the initial two years.
Our literature review concerning the experiences of professionals from abroad, as well as our interviews with employers shows that the Swedish system for granting work permits is perceived as somewhat difficult to understand. This sometimes leads to highly qualified persons choosing to work in other countries, where their future seems less uncertain.
Government efforts can increase Sweden’s attractiveness
Although Sweden as a country is attractive to internationally mobile, highly qualified professionals, there is potential for improvement. In this respect, the government has a role to play. Growth Analysis specifically wants to highlight the following possible measures:
A functioning housing market, good public transport and access to schools with a good academic record and instruction available in English are all important puzzle pieces that enhance attractiveness. In order to achieve this, government efforts and cooperation between the state, regions and municipalities are required.
It is important that the process of granting work permits is flexible and predictable and that the relevant government authorities are afforded the right tools to expedite the process smoothly.
The Swedish labour migration regulations provide good conditions for companies to quickly fill competence gaps. However, as far as the rights granted by the work permit are concerned, it appears, in some respects, less attractive for highly skilled foreign professionals than in other countries. The government should therefore consider how the system could be made more attractive. Providing highly qualified professionals from abroad with greater certainty regarding their future is something we see as an important measure to strengthen Sweden’s attractiveness. The government should also monitor developments regarding the EU Blue Card and ICT permit and in the future consider harmonising the parallel systems.
Changes to the current tax reduction for foreign experts could improve foreign highly qualified professionals’ net income. However, the lack of data from the Taxation of Research Workers Board (Forskarskattenämnden) makes it impossible to evaluate the tax reduction’s effects. Therefore, we cannot provide concrete recommendations on how and whether the instrument could or should be adjusted.
¹Highly qualified professionals from abroad are defined here as people who have at least one year of college or university education (or unknown education level) and/or a highly qualified occupation according to the Swedish Standard Classification of Occupations, SSYK.