Bidding War

Nations are joining the fight as competition for skilled workers heats up

This original artwork was created with the assistance of DALL-E.

The global war for talent is heating up, yet few are aware of it or its implications.

Last year, a Wellington-based economic development organization initiated a campaign aimed at encouraging Americans to move there, showcasing expat experiences and featuring nearly 3,500 job vacancies, over 200 of which offered salaries exceeding $120,000 U.S. These ads ran on national television across the country and in major newspapers like The New York Times.

But why now? To put it simply, the global labor market has changed.

Like many leading economies, including half of those in the G20, New Zealand now faces the tripartite challenges of declining birth rates, super-aging populations, and rapidly evolving technological landscapes. These demographic and technological shifts have caused the demand for skilled workers to surge worldwide in recent years, reshaping global migration trends and labor market strategies at the national scale.

These countries have been forced to contend with the reality that without population and labor market growth, their economic position and prosperity are at risk, including public services, infrastructure, and social welfare programs reliant on taxpaying citizens. So, in order for those countries to compete, they have little choice but to innovate their immigration systems to attract, nurture and retain talent from abroad.

In-demand skilled workers now have a choice of not only who they work for but also where they work, so countries with better offers, including affordable housing, healthcare, public safety, and education, have a competitive edge.

Pining for a move

Historically, Americans haven’t been keen to move abroad — a full 72% of them live in or close to their hometown, according to research from American Van Lines. However, as I note in a recent article for #NewRules, data suggests that this might be changing thanks to challenges at home, including lack of affordable housing, financial barriers to higher education, deteriorating public safety, and healthcare costs. A full 9 million Americans now live overseas, according to the U.S. State Department — a historic high.

Further, according to a 2022 Gallup poll, 15% of all Americans want to leave the U.S. permanently. A recent study conducted by Preply, the language learning platform, suggested that GenZ is more inclined to seek opportunities abroad than older generations, citing the lack of social protections and gun violence as their primary motivations. This data sheds light on an emerging challenge for American businesses and society. It portends a potential future where highly skilled Americans may choose to leave, further tightening the U.S. labor market and eroding the tax base.

New Zealand’s initiative to tap into this growing trend was sparked by the FIFA Women’s World Cup hosted by New Zealand and Australia last year. Its objective was to prompt disillusioned Americans to consider New Zealand a place where they could have a true work-life balance. According to John Allen, the CEO of WellingtonNZ, the organization responsible for the campaign, this consideration has become increasingly relevant as people reevaluate their work-life balance in the aftermath of the pandemic.

The demographic dilemma

It’s all a numbers game, and some countries have been dealt a bad hand that keeps getting worse.

In Japan, where the population is aging at a pace faster than anywhere else in the world outside of Hong Kong and South Korea, the labor shortage has reached critical levels. Just last week, Japan recorded a record-low birthrate, so the domestic labor pool will continue to shrink for decades to come without an influx of immigrants.

Japan has traditionally been cautious about immigration. However, recent years have seen somewhat of a paradigm shift, with the government launching the Specified Skilled Worker visa, aiming to bring in more than 345,000 workers over five years in sectors such as agriculture, nursing care, and construction. Former Prime Minister Yoshihide Suga emphasized the importance of these measures, stating, "To sustain our economic growth, Japan must embrace the dynamism that comes with diversity."

Germany faces a similar predicament, with a significant portion of its workforce nearing retirement. The German Federal Government has been proactive in addressing this through the Skilled Immigration Act, designed to make it easier for non-EU skilled professionals to migrate. Former German Chancellor Angela Merkel highlighted the strategic importance of this approach, noting, "Skilled workers from abroad are key to Germany's innovative strength and economic prosperity."

Down Under to the Great White North

Even historically pro-immigration countries need to up their game.

Australia and Canada are examples of countries that have long recognized the value of skilled immigration to their economic health. Australia's Skilled Independent visa (subclass 189) and Canada's Express Entry system are both points-based immigration programs that select applicants based on factors such as age, education, work experience, and language proficiency. Canadian Prime Minister Justin Trudeau has often spoken about the country's welcoming stance on immigration, arguing that "Diversity is our strength," and noting the critical role of immigrants in driving Canada's growth.

In Australia, the government has been fine-tuning its immigration strategy in recent years to target specific skills shortages through its Skilled Occupation List (SOL), ensuring that the country remains competitive in sectors like technology, engineering, and healthcare. Prime Minister Anthony Albanese has underscored the importance of skilled immigration reform, calling for "a system that works for Australia, a system in which we're able to access the skills we need."

Following its departure from the European Union, which limited its ability to draw talent directly from member states, the United Kingdom introduced a points-based immigration system to attract skilled workers. This system prioritizes skills and talent over nationality, with Health and Care visas and Global Talent visas aimed at addressing shortages in critical sectors. Prime Minister Rishi Sunak has emphasized the importance of skilled immigrants, stating, "We don't have a monopoly on talent in this country, and we recognize that nearly half of our most innovative companies have an immigrant founder."

In the United States, the H-1B visa program is a cornerstone of its strategy to attract high-skilled workers, particularly in the technology sector. Despite raging national political debates over immigration, particularly on the Southern Border and so-called sanctuary cities, the program underscores the country's reliance on foreign talent to maintain its global leadership in innovation. President Joe Biden has acknowledged the need for reform, advocating for policies that "ensure our economy can compete on the global stage."

Global competition

Diversity is a key element of innovation, and the global talent pool can deliver.

INSEAD, the esteemed French business school, has been conducting an annual assessment of the talent competitiveness among countries since 2013. Last year it released the 10th edition of its Global Talent Competitiveness Index. The 2023 edition of the index evaluates 134 countries across various income levels based on their talent performance, aiming to assist nations in formulating and implementing policies and actions for enhancement.

According to INSEAD, Switzerland ranks as the world’s best country for attracting and nurturing talent for the 10th year in a row. However, other nations are making moves to take over that spot and using innovative approaches to do so.

France's French Tech Visa is aimed at tech entrepreneurs, investors, and talent, which is part of its broader strategy to become a startup hub. President Emmanuel Macron has been vocal about making France a startup nation, reflecting a broader European trend toward leveraging immigration for economic innovation.

In Asia, Singapore has emerged as a key destination for skilled professionals, thanks in part to its Tech.Pass program, which allows tech professionals, leaders, and entrepreneurs to start and operate businesses, lead corporate teams, or lecture in universities — Singapore has been particularly savvy in its ability to match workforce supply and demand. This initiative reflects Singapore's ambition to be at the forefront of the digital economy, with Prime Minister Lee Hsien Loong emphasizing the importance of "attracting the best and brightest to contribute to our society."

Innovation forward

Immigration is a tricky issue, especially in this period of disruptive demographic change and growing nationalism.

As global competition for skilled labor continues to build, it's clear that leading economies must not only offer attractive immigration policies but also ensure that they provide a welcoming environment, opportunities for career advancement and a high quality of life. The success of these strategies will depend on their ability to adapt to the changing needs of the global economy and the aspirations of a young, mobile and ambitious workforce.

The moves by nations across the world to address skilled worker shortages highlight a fundamental truth: in the race for economic prosperity and resilience, talent is now the most precious commodity.

The global labor market will likely continue to liberalize in the coming years, and even more innovative national strategies will be aimed at attracting skilled workers from abroad. The nations that can effectively communicate their value propositions to the global talent pool will be best positioned to thrive in the decades to come. Those that don’t will likely fall behind.