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Swedish government and industry address IT skills shortage

Sweden faces major challenges in resourcing its growing IT sector with the right talent

Sweden’s innovative and expansive IT sector is facing a future skills shortage, and education and immigration reforms are part of the remedy.

A shortage of candidates for certain niche jobs, such as systems architecture and programmers, already exists in key industrial areas such as Stockholm, Gothenburg and Malmö.

Sweden’s IT skills shortage comes amid a shrinking labour pool as the national unemployment rate falls. Unemployment dropped from 7.4% to 7.2% in June.

Another concern for the IT industry is Sweden’s low birth rate and ageing population,which threaten to impede growth prospects for the national economy.

The expert working groups commissioned by prime minister Stefan Löfven’s coalition government in 2017-2018 have reached a consensus on the need for a more liberalised national labour policy that links skills-based immigration to national development and to growing core areas of industry, including the country’s expanding IT and digital technology base.

The IT industry remains a huge contributor to the Swedish economy, accounting for 42% of production growth between 2005 and 2013.

In 2017, Sweden’s exports of data-based services exceeded €12.5bn and the IT and telecom industry generated about €81bn in turnover.

The importance of digital is also growing, with more than 6.3% of Sweden’s labour force employed, directly or indirectly, in digital services in 2017.

The threat of a worsening skills shortage has been on the horizon for several years. Last year, the Swedish IT & Telecom Industries (SITTI/ IT&Telekomföretagen), which is affiliated to the Swedish service sector employers’ organisation, Almega, reported that the IT industry faces a deficit of more than 70,000 IT professionals by 2022 unless urgent measures are taken to attract more foreign workers with IT and digital technology skills.

Stark warning

This stark warning was contained in a joint SITTI/Almega report, The IT skills shortage: The Swedish digital sector’s need for cutting-edge expertise, published at the end of 2017.

One of the report’s main observations is that the integration of digital technology and digital services into the everyday work of virtually all companies and activities will create increasing demand for IT specialists.

“The continued growth of the IT sector in Sweden is being threatened by a lack of cutting-edge expertise,” said Fredrik von Essen, SITTI’s enterprise policy expert responsible for skills provision. “We estimate that we could see a deficit of around 70,000 people with IT or digital-related competencies by 2022. This will happen if no special measures are taken to halt the decline.”

For Sweden’s IT and digital enterprises, a major hurdle to securing continued growth is the country’s outdated labour market and immigration policies, and the government is showing signs of responding to industry leaders’ concerns.

Talks between industry organisations and the government have produced proposals to strengthen IT education and broaden the vocational choices available to secondary-level and college students.

These reforms would entail creating a deeper collaborative bond between the country’s schools system and private sector. This integrated approach will also require the government to develop a more effective policy on labour market skills and migration, while enhancing coordination between key ministries and making new commitments to digitisation in schools.

Attract foreign talent

Industry also wants the government to create a national strategy to attract foreign talent. Such an agency would be tasked solely with identifying and recruiting for skills shortages in the Swedish labour market.

Under strong lobbying from industry, the Swedish government is expected to develop a multi-faceted skills-based immigration policy that may include a more dynamic blueprint to attract more international students to Sweden. The IT industry wants to see the number of international students applying for Swedish universities to increase by at least 10,000 a year.

The IT industry is proposing more generous public-private funded scholarships, and extended deadlines for seeking work in Sweden post-graduation.

According to SITTI, the number of international students coming to Sweden has fallen since 2011, and fewer than one in 10 students from countries outside the European Union find their way into Sweden’s labour market. A future solution may include financial incentives for foreign students to stay and work in Sweden, including tax breaks. 

On the legislative and policy fronts, Sweden’s IT industry wants the government to restructure the state-funded scholarship system, which is linked directly to Sweden’s international aid budget and so is not immediately available to students worldwide.

Sweden’s tech industries want to see the scope of the programme increased as part of a more ambitious co-financing project with the private sector.

The government – specifically, the departments of justice, digital development, education and research, employment, enterprise and innovation, and finance – are developing new initiatives in partnership with industry organisations to roll out improved skills training schemes targeting Sweden’s large immigrant community.

Increase in asylum seekers

The foreign-born element of Sweden’s population has grown by 66% to 1.7 million since 2001, and about half are from non-EU countries. Sweden saw a significant increase in asylum seekers in 2015, and more than 163,000 asylum applications were processed in 2016 alone – the highest per-capita number in Europe.

“There is much more we can do to ensure that our IT sectors continue to grow and that enterprises have access to the skills that they need,” said Mikael Damberg, Sweden’s minister for enterprise and innovation. “The labour pool remains a problem, but one the government, working with industry, can fix.”

Despite the government’s optimism, the fundamental problems to resolving Sweden’s IT skills shortage persist. The low birth rate, in a population of just under 10 million, is compounded by a rising number of retirees.

The Public Employment Agency estimates that for Sweden’s economy to maintain a satisfactory growth trajectory, it will need to attract 64,000 new immigrants each year just to maintain the balance between those who are still productive in the labour force and those reaching retirement age.

Given the low birth rate, a higher rate of immigration is the only real long-term solution for Sweden to replenish its skills and labour pools while aiming for sustainable economic growth.

The government has also put forward initiatives to establish better-resourced educational and training schemes that target newly arrived immigrants. The main strategy here is to fast-track skilled and semi-skilled immigrants into the labour force.

And the state-funded scheme has solid potential. While the general unemployment rate is running at about 7.2%, the rate of unemployment among Sweden’s foreign-born residents is closer to 16%. The government wants to reduce this to the national average within six years.

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