Immigration policies in Europe have recently taken a concerning turn, particularly with regards to the tech industry. The focus on anti-immigrant strategies by politicians, such as Poland’s ruling parties and France’s far right, has not only affected illegal immigration but has also targeted skilled migration. This shift in policy has left the business community baffled, as skilled migration has been vital to the growth and success of Europe’s technology sector.
Key Takeaway
European governments’ anti-immigration policies are harming the tech industry’s access to talent and hindering its growth. Skilled migration has been crucial to the success of startups and the development of the sector. It is essential for governments to create environments that foster the growth of thriving businesses by supporting international talent.
The Importance of Immigration in the Tech Industry
In Europe, it is rare to find a startup team comprised solely of individuals from the same country. Foreign-born entrepreneurs have played a significant role in driving the growth of the UK’s fastest-growing companies, with 39% of them being setup by foreign-born individuals. This trend is further exemplified in the United States, where foreign-born citizens are 80% more likely to establish their own firms. Immigrant entrepreneurs have founded a significant number of tech unicorns worldwide, with 55% of the 582 tech unicorns in existence in 2022 being founded by immigrants.
However, European governments seem to have forgotten the importance of immigration to the tech industry’s growth and prosperity. These governments’ focus on tightly controlled borders is hindering the sector’s access to talent, hurting its ability to thrive and innovate. Estonia’s experience provides a valuable lesson in the benefits of pro-immigration policies and support for the startup community. In just two decades, Estonia has become a tech powerhouse, boasting more unicorns per capita than any other country in the world.
Tech Industry Facing a Skills Crisis
The tech industry, like many other sectors, has faced significant challenges due to the global economic downturn. Startup funding has dropped by 50% since its peak in 2021 and 38% since 2022, according to Atomico. To survive, startups need to build resilient products and teams. Unfortunately, the sector is now grappling with a major hurdle to growth – the difficulty of hiring skilled workers. With unemployment at historic lows, there simply aren’t enough local workers to support the growth of technology and other sectors.
In the UK alone, there are 2 million tech sector job vacancies out of a total of 14.85 million vacancies, accounting for 13% of all job openings. This talent shortage is not limited to the UK; it is a global problem. According to the Korn Ferry Institute, the talent shortage is projected to cost governments and companies $8.5 trillion by 2030.
Losing Talent and Ecosystem Competitiveness
An added challenge for the tech industry is losing talent to other startup ecosystems. Despite the UK’s efforts to welcome global founders, there is a growing trend of founders starting their businesses elsewhere in Europe, where more mature ecosystems in countries like France and Germany offer advantages in terms of hiring talent. Failing to create conditions for startups to flourish and scale not only results in the loss of businesses but also reduces the likelihood of future listings in established tech hubs like London.
Estonia: A Case Study in Immigration and Innovation
Estonia’s success in building a thriving tech sector serves as an example of the positive impact of embracing international talent. With four times more startups than any other European country and a high number of unicorns per capita, Estonia’s intentional policies promoting innovation and immigration have paid off. Initiatives like the Startup Visa program, e-Residency, and the Digital Nomad Visa have created a tech landscape that attracts global investment and expertise. The presence of foreign-born founders and employees has fostered genuinely global teams.
The sustained growth of Estonia’s tech ecosystem has clear economic benefits. The tech sector contributed 8% of GDP and 10% of all employment taxes in Estonia last year.
Conclusion: The Need for Supportive Environments
The tension between the tech community and Europe’s anti-immigration stance highlights the critical role of talent in driving innovation and sustainability in the industry. Governments must actively foster environments that support the establishment and growth of successful tech companies. The tech industry relies on international talent, and impeding access to this talent pool undermines its potential for success. Creating supportive environments for founders and their teams is crucial to ensure the long-term prosperity of the tech sector in Europe.
