Global labor shortages
The list of countries experiencing labor shortages is extensive, including Switzerland, the United States, South Korea, Canada, South Africa, France, Japan, Germany, Australia, Hong Kong, Slovakia, Singapore, New Zealand, Italy, Brazil, Norway, and the United Kingdom. In fact, around three-quarters of companies globally report difficulties in hiring employees, although the severity of the issue varies greatly by region and industry.
Despite offering higher salaries, skilled worker shortages persist in many industries. Innovative sectors such as information technology and communication, engineering, software development, data analysis, marketing strategy, and e-commerce are constantly seeking new talent. Governments around the world are competing to attract international professionals.
For instance, countries like Canada and the United Arab Emirates (UAE) promote their cosmopolitanism. Canada leverages its positive global image, while the UAE, where the majority of the population comprises immigrants, implements measures to ease the entry and stay of foreign talents. Although the cost of its golden visa tripled in February (from 50 to 150 dirhams, that is, from 14 to 41 dollars), it remains affordable for investors and foreign talents. The UAE aims to become a global hub for emerging technologies, finance, industry, and energy and thus seeks to recruit international talents in these fields.
Despite the ongoing pandemic, certain sectors are under pressure worldwide, particularly the healthcare industry. Nurses, nursing aides, and physicians are in particularly high demand, while countries with aging populations are struggling to recruit home care assistants due to the physically demanding and poorly paid nature of the job.
In addition to the healthcare industry, other industries, such as hospitality, construction, and transportation, are also experiencing shortages of skilled workers. These shortages have led governments to ease visa requirements, shorten processing times, and offer incentives to attract foreign talent.
Looking beyond Canada and the UAE, what other measures have countries implemented to attract foreign workers? Let's take a closer look.
South Africa: Streamlining the visa process
After a recent visa application fiasco that caused delays for many foreign workers, South African President Cyril Ramaphosa has pledged to improve visa processing efficiency and speed. In March, many foreign workers saw their career aspirations in South Africa dashed as their visa applications were canceled at the last minute due to processing delays. At the time, the South African Department of Home Affairs had a backlog of 62,692 visa applications. To avoid such backlogs in the future, the South African government plans to revamp its work visa system, prioritizing faster processing times and simplifying the application process. This will make it easier and quicker for foreign workers to obtain work visas.
South Africa is also grappling with a shortage of skilled workers in various sectors, including information technology, finance, healthcare, engineering, management, marketing, design, media, and arts. In the finance sector, there is a shortage of external auditors, financial analysts, and analytical and management accountants. The information technology field is in high demand for data analysts, software developers, database designers, system analysts, and marketing analysts. Additionally, there is a need for web designers, 3D engineers, and multimedia engineers. Like many other countries, the healthcare sector is struggling to recover from the pandemic, with a severe shortage of nurses.
At the 5th Investment Conference in South Africa, Cyril Ramaphosa announced that the country would establish a points-based system to offer more flexible pathways for qualified candidates, following global best practices. South Africa is competing with other countries, such as Australia, Germany, the United States, and Canada, to attract foreign talent. The country is also facing a brain drain that poses a threat. Therefore, the South African government is determined to remain attractive to the local and foreign talent this year by tackling this challenge.
Bahrain's new "Golden Visa" program
Bahrein is re-entering the competition to attract foreign investors after being overshadowed by Dubai since the 2000s. As part of its 2021 economic recovery plan, the Gulf power has announced an improved "Golden Visa" program. This program aims to boost local and foreign investment and attract and retain foreign talent.
In 2022, the state launched a new "Golden Visa" program, while other nations, such as the UK and Portugal, discontinued their controversial programs. Bahrein intends to use the Golden Visa program to compete with Dubai, which also has a similar visa program. The new program allows investors, entrepreneurs, and highly skilled workers to reside in the country for up to ten years.
The new "Golden Visa" program supports local and foreign investors who create over 500 local jobs or invest in projects worth at least $50 million. While details are yet to be revealed, the government will expedite the issuance of commercial licenses, lands, and building permits for investors. The new program will also streamline visa issuance for greater efficiency. As foreign labor constitutes nearly half of its population, Bahrein heavily depends on foreign talent, and the Golden Visa program is another way to retain it.
Germany: A more flexible immigration law
Germany's skilled labor shortage is costing the country 100 billion euros. The Association of German Chambers of Commerce and Industry has expressed its concerns over this issue. According to its recent report, 53% of German companies were struggling to find skilled workers in 2022, up from 51% the previous year.
To address this issue, the German government introduced a bill on March 29 to relax immigration regulations for qualified foreign workers. The bill aims to attract 400,000 foreign talents annually and is based on Canada's immigration system, where candidates are evaluated based on a points system.
Under the new system, foreign workers can apply for German citizenship after residing in the country for five years or even earlier if they demonstrate their efforts to integrate, such as speaking German. Non-European foreigners can apply for German citizenship without having to renounce their own, an essential measure as renouncing nationality has been a deterrent for many international talents.
France's measures to address labor shortages are still inadequate
In France, labor shortages are affecting two dynamic regions in the west and south of the country, where job offers are posted along the roadsides. According to the Ministry of Labor and France Stratégie, there are around 760,000 job vacancies each year, compared to approximately 640,000 new entrants to the labor market. As a result, some sectors and regions are more affected than others, and the deficits are expected to worsen by 2030.
Care assistants, administrative and commercial executives, drivers, maintenance staff, and home helpers are among the jobs in demand throughout the country. However, these jobs are not adequately remunerated, making attracting people to these fields challenging. In western France, regions like Brittany, Pays de la Loire, Nouvelle-Aquitaine, and Occitanie need more computer engineers. There's also a growing demand in industry, construction, transport, healthcare and personal services, trade, catering, new technologies, agriculture, and fishing.
The Council of Economic Analysis (Conseil d'analyse économique - CAE) suggests that the French government should do more to address labor shortages by promoting economic immigration and attracting qualified and diverse immigrants to France. The CAE's 2021 report argues that France still falls short compared to other nations in this regard. The government needs to communicate better when it establishes programs to attract international talent, as many such programs go unnoticed. The administrative bureaucracy and an outdated list of jobs in demand also need reform.
The current draft law on immigration in France seems to focus on conflictual terms. The CAE believes that France can only compete with other nations by taking real steps to promote economic immigration and foreign talent. Foreign graduates struggle to find employment in France, as they are not sufficiently protected and must meet the same criteria as work visa applicants. Besides, French universities do not offer enough courses in English, which hinders attracting foreign talent.
Hong Kong's Top Talent Pass Program is a success
Hong Kong has taken a significant step towards reclaiming its position as an international finance hub with the successful launch of its new Top Talent Pass program in December 2022. According to Chris Sun Yuk-han, the Secretary for Labor and Welfare, the program has been a resounding success with foreign professionals, having received around 5,800 applications by mid-January 2023. Notably, more than 4,000 of those applications have already been processed, with an impressive approval rate of 90%.
The Top Talent Pass is a two-year visa that is exclusively reserved for qualified foreigners. These professionals must demonstrate earnings of at least HKD 2.5 million (approximately USD 318,000) in the past year or have graduated from one of the world's top 100 universities and worked for at least three years in the past five years. It is worth noting that the new visa program coincides with the lifting of border restrictions between Hong Kong and China on January 8. Hong Kong views the Top Talent Pass program as an opportunity to complement other global finance hubs such as Singapore. Sun Yuk-han stated: "Now is the right time for us to attract people from all over the world to Hong Kong."
Singapore introduces new points-based system to attract foreign talent
Singapore is taking steps to improve its visa regime to attract foreign professionals. In September this year, the government will implement the most extensive overhaul of its program yet. While the government is still encouraging local employment, it also intends to create a more diversified job market. "As Singapore seeks to capitalize on new economic opportunities, businesses will require access to qualified talent to fill these roles," explains a statement from the Ministry of Manpower. The government's aim is not to pit foreign workers against local ones, as both are necessary for the city-state's growth.
Local workers alone cannot address the labor shortage. The Ministry of Manpower has updated its list of sectors and occupations in demand, revealing that 6 sectors and 27 occupations are struggling to recruit. Agriculture, finance, the green economy, health, information technology, and the maritime industry are all areas where Singapore needs more workers. In information technology, for instance, the most in-demand positions include data scientists, software developers, mobile app developers, artificial intelligence engineers, and cybersecurity experts.
It seems that points-based systems are gaining in popularity. Singapore is adopting a points-based system, similar to South Africa's, for the current Employment Pass (EP), a work visa intended for foreign executives and professionals holding specialized jobs. In December 2022, 13% of the foreign workforce were holders of the EP visa. Singapore aims to increase this proportion by reforming its visa regime. The points system, called COMPASS (Complementarity Assessment Framework), will evaluate EP visa candidates based on several fundamental criteria, including qualifications and diversity within the hiring company. To be eligible for the EP visa, candidates will require 40 points. In addition, foreign candidates applying for one of the 27 in-demand occupations defined by the Ministry of Manpower will be able to receive 20 bonus points.
Japan: Reforms for greater attractiveness
The demographic urgency in Japan is pressing the government to take action. The country has lost 800,000 inhabitants in 2022, making it crucial to implement measures to attract and retain foreign workers. Although known for its strict immigration policy, the government has been slowly opening up to foreigners. Since the beginning of the year, measures have been introduced to attract and retain them.
A new Specified Skilled Worker Program in view
On Monday, April 24, the Japanese government announced plans to ease its regulations to allow more skilled foreigners to remain in the country for an extended period. The focus is on the Specified Skilled Worker program, which consists of two visas: Type 1 and Type 2. Launched in 2019, these visas marked a significant shift in Japan's immigration policy, but with limitations. The Type 1 visa, granted to moderately skilled foreigners, lasts only 5 years and does not allow family members to accompany the visa holder or apply for permanent residency. Additionally, the government plans to remove the time limit for the Type 1 visa. In contrast, the Type 2 visa, intended for highly skilled foreigners, allows family members to accompany the visa holder and permits indefinite stay. Currently, the 2019 law applies to only two sectors - construction and shipbuilding - but the government wants to expand it to 11 others, including the restaurant, agriculture, and accommodation sectors, which are currently under the Type 1 visa.
NGOs and associations have always been wary of the Specified Skilled Worker program, especially the Type 1 visa, fearing similar effects to those of the controversial Technical Intern Training Program. On April 10, a panel of experts, including government members, proposed eliminating the program. With a tarnished image due to reports of foreign worker exploitation, Japan wants to show that it has evolved. It not only needs to attract foreign talent but also retain it. However, as of February, 146,000 foreign workers have the Type 1 visa (the least protective and limited to 5 years) compared to only 10 for the Type 2 visa. By expanding the scope of the Type 2 visa and removing the time limit of the Type 1 visa, the government hopes to reverse these numbers.
The Japanese government recognizes that the success of the Specified Skilled Worker program is crucial to offset the aging population and declining birth rate. By attracting skilled foreigners to work and reside in Japan, the country can maintain its economic competitiveness. The government plans to streamline the application process and enhance support services for foreign workers, such as Japanese language training and assistance with finding housing. While there is still some opposition to the program, the government hopes that the benefits of the program will outweigh the concerns and help Japan achieve its long-term economic goals.
Japan opens its doors to investors and digital nomads
On Wednesday, April 26, the Kishida government announced its plan to target foreign investors and digital nomads, following the lead of other countries in the race to attract this new breed of worker. Japan aims to attract 750 billion dollars in foreign direct investments by 2030 while significantly increasing the number of digital nomads.
Despite competing with South Korea, which is developing its K-pop visa and digital nomad visa projects, Japan does not offer a digital nomad visa. However, the government claims to consider the new ways of working that have emerged since the pandemic. Despite the competition, the government is ambitious and aims to become a new hub for innovation and research.
The Japanese government's plans to increase foreign direct investment and attract digital nomads have raised the stakes in the battle for semiconductors and the yen's weakness. Prime Minister Fumio Kishida hopes to increase investments in health, green technologies, digitalization, and new technologies to make Japan more open to the world. The new plan also aims to support entrepreneurs with longer stays to establish their businesses in Japan and ease regulations for highly skilled professionals, including a reduction in the minimum required income for visa applications.
Fostering a cultural shift in Japan to embrace foreign talent
As Japan faces an urgent need for labor, the question remains: will foreign workers be willing to fill the gap? Historically, Japan has relied on neighboring countries like the Philippines, Vietnam, Thailand, and Indonesia to provide foreign talent. However, reports of discriminatory practices have deterred some workers from choosing Japan as a long-term destination. Therefore, to effectively attract and retain foreign talent, Japan must take more than just image-changing measures and address systemic issues of discrimination and inequality in the workplace.
Japanese manufacturers and industries have reported that many Japanese citizens, particularly young people, are reluctant to take on "difficult," "dirty," or "dangerous" jobs. This reluctance is also present in South Korea. Foreign workers could potentially fill the labor gap in sectors that fail to attract Japanese citizens, provided they receive adequate pay and protection.
Experts have expressed concern about the poor treatment of "certain" foreign workers, mainly blue-collar workers who are disadvantaged compared to white-collar workers. Reforms to the Type 1 and Type 2 visas were implemented in response to these concerns. However, addressing this issue will require a broader reexamination of the country's vision, which has been built on a political construct of ethnic homogenization.
Some within the government have expressed skepticism about relying on foreign workers, fearing they may be "incompatible" with Japanese culture. They argue that investing in robotics would be a better long-term solution. However, this perspective overlooks that the problem is not "foreigners" but rather the labor shortage. Japan's aging population is a growing concern, with a birth rate that stagnates at 1.3 children per woman. Robotics alone cannot solve the demographic crisis. Without intervention, the country is expected to lose 30% of its population by 2070.
Inclusive economic policies: Addressing the challenges of brain drain and labor shortage
The challenges of aging populations are immense, and Japan is no exception. The World Health Organization (WHO) warns of the risk of brain drain, as countries such as Germany, France, and the United Kingdom recruit doctors from less wealthy countries, depleting them of valuable talent. However, brain drain also affects wealthy countries. For example, France has been losing researchers for years, as they prefer better pay and recognition in countries such as the United States, Switzerland, or Canada. Spain and Italy are also struggling to retain their young graduates.
In some cases, the fault lies with the States themselves, as they have failed to value manual labor. As a result, these important sectors, such as construction and industry, suffer from severe labor shortages. The WHO recommends that countries adopt a broader vision that goes beyond the strict economic framework. States must provide foreign workers with the same rights as others, ensure their protection, allow them to stay in good conditions, and consider the needs of other countries. In short, social and human measures must be included in economic projects.
Useful links:
United Arab Emirates: Golden visa; Talent attraction and retention
South Africa: work visas
Germany: Make it in Germany
Hong Kong: Top Talent Pass
France: Passeport Talent
Singapore: Shortage Occupation List (SOL)
Japan: Specified Skilled Worker program
Switzerland: working in Switzerland as a foreign national
