The Private Sector's Immigration Problem

Immigrants comprise a rich talent pool and a ripe hiring ground, and business can't ignore this, especially in a time of labor shortages

Posted on Winning the Talent War: November 20, 2007 at 7:39 PM.

Elena, 27, a Polish nanny, newly living and working in Islington, is part of a huge wave of Eastern European immigrants transforming the service economy in Britain. Talk to any London-based home owner and you're likely to get rhapsodic tales about immigrant skill sets and work ethnic.

With robust growth and an increasingly "hip" urban culture, London—and other cities in the UK—is now the destination of choice for young, energetic (and often well educated) immigrants. The figures are just in and they're impressive. According to data released last month by Somerset House, the British population is projected to rise from 63 million (in 2007) to 71 million (in 2031). The UK is one of the few advanced countries with an expanding population.

Japan, Russia, Italy and Spain (whose populations are expected to plummet over the next fifty years due to a birth dearth) would give their eye teeth to be in such a situation. Policy makers in these countries find themselves struggling with increasingly burdensome dependency ratios (there has been a doubling of the number of retirees per worker) and shrinking markets.

Despite this windfall of incoming talent, the British political establishment has reacted badly to spiking population growth rates. The Tory opposition is outraged. Ever the "Little-Englanders," conservative pundits are complaining bitterly about the dilution of British culture and the evils of multi-culturalism. But even the Labor government (which has often backed liberal immigration policies) is newly anxious. In recent speeches Liam Byrne (Minister of Immigration) has shared his "dismay" at the burden produced by these new immigrants—specifically the overload on schools and other social services.

The private sectorin the UK and beyond—needs to weigh in and take a more assertive pro-immigration position in their respective countries, reminding political leaders—on both sides of the ideological divide—that immigrants comprise a rich talent pool and a ripe hiring ground.

At a time of labor shortages these are convincing arguments. In recent months the Financial Times has run pieces on "Understanding the Skills Gap" (July 16, 2007) and "Employers Hit by Talent Shortages" (Oct 23, 2007) which describe growing labor shortfalls in sectors as diverse as aerospace, pharmaceuticals and financial services. Demand is outstripping supply across a range of occupations. Fully 23% of employers in the UK say they would hire more staff if they were available—that expansion and growth are labor constrained.

Other nations are rolling out the red carpet. The Swedish government recently created a tax incentive for foreign nationals working in Sweden—allowing them to pay zero income tax on the first 25% of earnings.

It's high time that the UK got with the program and actively welcomed immigrants. And where governments are too short-sighted, the private sector must take a more proactive approach to this talent pool at their shores.

Do you think the private sector is doing enough to integrate immigrant talent into the work force?

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