Whatever happened to the brain drain?

With global talent on the move, fear of the brain drain could turn into a net brain gain.

Dr Chris Emslie is at the end of his recruiting rope. Emslie is managing director of Fibrecore, a southern-UK based specialist optical-fibre subsidiary of Cisco of the USA's Scientific-Atlanta offshoot. When he could find no suitable UK candidate for a senior process engineer's post he approached a Danish competitor. In the end, he says, "it is likely that we will employ a Bangladeshi national via the Toyota Research Institute in Japan".

Emslie isn't alone. His local employers' organisation says over half the manufacturers in this region are "being forced to look outside of the UK" for the skilled people they need. Businesses throughout Europe and far beyond tell the same story. But what they see as a nightmare is an internationalist's dream.

Welcome to the 21st century. To many observers, one of the enduring paradoxes of recent Western politics has been the furious championing of the market economy by parties and individuals instinctively hostile to foreigners. For decades, right-leaning politicos have served a constituency enthusiastic for the free market - as long as it stopped short of offering as free a market in people as it did in goods and services.

Now that view is history. In the UK, for example, there's a residual outward-facing fear of immigration paired with an inward-facing obsession with the 'Brain Drain'. But both are yielding to a broader acceptance of the same global reality that, until recently, had given UK consumers years of ever-cheaper and more varied manufactured products.

Familiarity breeds content. Today, even determined nationalists are happier to take immediate treatment from a Somali doctor than to languish in a health queue, or to let a Polish plumber fix their boiler than no-one at all. That's nothing new, as Robert Winder pointed out in his book 'Bloody Foreigners'. Immigrants always arrive to popular resentment, only to become assimilated, even valued, when the next wave arrives from somewhere else.

But Western politicians see more in today's osmotic population movements than the pattern of ages. It's not just that, though their anti-immigration rhetoric is still a crowd-pleaser, the crowd is smaller. They also know when they're beaten. Whatever they or their constituents think, trans-national corporations (TNCs) have changed the subject. Free migration gives TNCs access to highly-skilled labour while keeping a lid on its cost. The controls had to go.

Brutal global-scale competition forces companies to be ever more innovative. Ageing developed-economy populations accentuate shortages of some skills, driving up costs and forcing TNCs to look elsewhere for talent, says Unctad economist Torbjörn Fredriksson.

Megacorp Technology has three choices when short of engineers. Raise starting salaries, recruit less expensive talent overseas, or move the work to a low-cost economy. Abolishing immigration controls has brought option two to life and made the brain exchanges implied by option three more effective. TNCs don't do option one.

Record profits and bear-market share prices sent TNCs out on a post-2000 spending binge. According to the UN's Unctad trade and development agency, global inflows of foreign direct investment everywhere, in developed and developing countries, and in the transition economies of South-East Europe and the Commonwealth of Independent States, soared 38 per cent in 2006 to $1,306bn, the third consecutive year of growth.

The gains have gone into cross-border mergers and acquisitions, and green-field investment in manufacturing and R&D centres. In 2004, TNCs employed 22 per cent of Hong Kong's working population, 47 per cent of Singapore's and over half of Ireland's.

Promotion for today's TNC insider is as likely to mean a move to Shanghai as to Stuttgart or Sheffield. As the International Labour Organisation, another UN agency, puts it: "Global talent has never been more mobile."

Follow the qualifications

The world's labour market now looks more like a weather system than a pressure vessel. Not for nothing has Charles Leadbeater of the Demos think tank spoken of a 'talent Gulf Stream' flowing round and lubricating the world's manufacturing and research hot-spots.

The balance of educational advantage has tilted south. In 1990, says Unctad, the developed economies had a 40 per cent share of all enrolments for tertiary-level technical qualifications. By 2001 their share had fallen to 28 per cent. The slack was taken up by the transition economies in eastern Europe and the commonwealth, and universities in Asia and north Africa. China, India and Russia accounted for one-third of all the world's tertiary technical students.

Professor Allan Findlay of Dundee University says: "Promoting skilled immigration is a prerequisite to sustained economic growth in a global economy." Throughout the 1990s, annual admissions of skilled immigrants to the US grew 15 times, from 12,000 in 1991 to 175,000 in 2001; those to the UK ten times, from 4,000 to 40,000.

Of course, talent goes out as well as in. A Brussels round table in 2001 estimated that 83,000 scientists and engineers left Europe for the US during the 1990s. Another study reported that the UK accounted for 32 per cent of foreign trained physicians in Canada and 39 per cent of those in Australia.

By the OECD's reckoning, the UK has 3.3 million expatriates living in other OECD countries, two in five of them with a tertiary education. However, the OECD data doesn't tell us whether they left in 1999 or ten or 20 years earlier, and the UK Daily Telegraph's recent headlines shrieking 'Brain Drain' overlook the fact that a great many of these expatriates are retirees.

Overall, Findlay insists, easier migration has moved the UK from Brain Drain to Brain Gain. Not long ago, he says, the UK engaged "in quite limited exchanges of highly skilled international migrants with other OECD countries". Now, he says, it's "becoming a major net recipient of international skills".

In 1990, skilled immigrants represented 7 per cent of UK immigration. By the turn of the century, they accounted for one-third. The same applies to 60 per cent of immigration to Australia and 68 per cent of that to New Zealand.

The greatest weakness in the 'Brain Drain' mindset, however, is that it takes no account of a deep cultural change among modern young professionals in diaspora from developing or recently-developed states. Many Irish professionals, for example, particularly those who left Ireland before its 'Celtic tiger' phase to work as 'illegals' in the United States, regard themselves as trans-nationals. They have no particular allegiance to either Ireland or the US and could happily work in either. Or neither. "Population mobility," says Findlay, "should no longer be viewed through the modernist lenses of states and of populations 'belonging' to nation states."

There is a fly in the free labour-market ointment. Some host economies have failed to develop their own talent. And they don't always recognise the talent coming in. The door may be open, but there's a trip-wire across the threshold.

The whole point of the TNCs' pressure on governments to burn immigration controls was to create a surplus of supply over demand. Now, though many are called, few are chosen, whether by a TNC or anyone else. Migration, even with qualifications, doesn't always guarantee a well-paid job.

Wasted talent?

On average, says the OECD, immigrants are more likely to be 'overqualified' for the work they do than those born in the host country. Nearly one in four immigrants to OECD countries has completed tertiary education compared with one in five native-born. In most OECD countries a much higher proportion of immigrants have PhDs in science and engineering than of the native-born population. In Canada, New Zealand and Norway, it is three times higher. In Denmark, Greece, Italy, Spain and Sweden the share of people doing a job for which they are overqualified is twice as high as for native-born workers.

There's one exception. About 17 per cent of the UK workforce are over-qualified. Almost 90 per cent of these, however, are native-born residents, a higher proportion than any other comparable economy.

Meanwhile, though the TNCs are calling the transmigrational tune, many of the smaller firms who employ the bulk of Western workforces aren't listening. Migrants and the native populations have always struggled to understand each other. Lucky the migrant with access to a slick TNC-scale HR department to offer language tuition and lubricate or plane away other, less tractable cultural frictions. The rest struggle on. 

If migrants aren't among the crème de la TNC crème, the employers they encounter won't necessarily recognise the interviewee talent under their noses, says OECD secretary-general Angel Gurría. "In all countries," he said when launching last month's Profile of Immigrant Populations in the 21st Century, "there is an issue concerning the recognition and valuation of qualifications and work experience gained in origin countries: employers in OECD countries often seem to discount these heavily."

He called for "much greater emphasis" on helping recent migrants learn the host-country language and become familiar with workplace practices. Potential employers, he said, should work harder to recognise foreign qualifications and understand the value of job candidates' work experience. That seems to make sense, for all concerned.

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