In times when we discuss the transformation of cities through digitalisation, it’s natural to have in mind the human factor. After all, the second most common reason for the renewal of cities, after climate change, is securing the future for generations to come. Besides including citizens in the decision-making process, authorities have another handy way to ensure a continuous fresh flow of ideas – talent migration.
The phenomenon is defined as the emigration of highly skilled or well-educated individuals and it is nothing new because there are many examples of human capital flight over the course of history. An example was the anti-Semitism in Europe around 1930-40s which drove great minds away from their homeland. One particular character called Albert Einstein for instance! More recently, the ‘war for talent’ sprung up in the business environment in the late 1990s and refers to a region’s potential to attract and retain talented citizens.
Globalization and urbanization provide an enabling environment for talent to spread, yet talent retention is likely to be one the defining economic issues of the century. Countries in the EU understand the potential of minds which differ culturally, socially and politically, yet talent retention failed to exceed the level of projects or to be integrated into smart city strategies. Compared with the noughties, talent migration in this decade has increased by 25% and is expected to increase by a further 25% by 2020, so it is relatively new ground for cities. They must explore the possibilities and devise strategies to make their city more attractive to talented individuals.
“…if the City of Copenhagen managed to retain all international talents for six months longer, this would yield economic benefits of 6.4 billion DKK (≈ 850 million €)” Mayor of Copenhagen
It is clear that cities – small and big – need to put together a strategy to hold on to new talent. Why is it so important? From a business perspective, new talent attracts new business opportunities and gives companies a reason to expand. As Dan Rosenberg, Senior Talent Acquisition Manager for Copenhagen Capacity told the audience at Nordic Smart Cities in Stockholm last November, “..talent is completely on demand. It’s the companies that tell us if they can’t grow if they can’t hire the right people they will leave.”
The city of Tampere in south-western Finland is not very well known on the international level, the city has an issue with high structural unemployment, it means there is a significant number of job openings, but the unemployment rate is at a stubbornly high 18% (the highest in Finland). Authorities understood that talent shouldn’t only mean professional talent coming from an academic environment. People move out to different countries or cities for various reasons, and if officials want to attract individuals’ skills, they need to start by providing a smoother integration into the new system and to motivate them to stay. To solve these issues the Finnish town put together a four part talent attraction management solution which aims to attract, receive, integrate and to make a reputation for the city. Through this solution, Tampere offers support to newcomers by assisting them in finding professional networks and links them to different stakeholders. The service also assures a faster integration by providing people with Finnish language lessons, as most jobs require a good understanding of the local language.
Human capital flight can result in two things according to an article on cross-border migration published in the Journal of the European Economic Association. On the one hand, when people settle down in a different country they will bring new economic benefits for the receiving country in the short term. In the long term, the sending state will also benefit from the phenomena of talent migration as a positive externality.
On the other hand, countries that are losing talent risk a ‘brain drain’, but there is no evidence that talent migration creates a talent shortage. For example, in the past decade, Romania has experienced a high migration rate in the medical sector. More than 14,000 doctors established themselves abroad in the last 15 years, but the country didn’t suffer an internal shortage of medics.
A 2014 LinkedIn report on talent migration highlighted that 63% of CEOs fear the availability of key skills for their companies, so in today’s business and economic context, public and private entities must work towards retaining and attracting human capital as a priority.