# 1 / 2023

How Switzerland remains successful - the seven pillars of innovation capacity

Pillar 5: Access to skilled workers from around the world

Innovation cannot be realized without qualified staff. In the previous chapters, the importance of education and, in particular, of technical knowledge and applied skills was emphasized. There has been talk of the "war for talent" as early as the 1990s. Intelligent personnel with a high level of understanding of technology and operational flexibility are considered to be extremely valuable and are hotly sought after in numerous countries. Ongoing demographic change and increasing digitization have further intensified the competition for these highly qualified specialists. This also applies to Switzerland, which has a long tradition of innovation by both foreign nationals and foreign companies.

A large number of studies underscore the positive influence of foreign skilled workers on the innovation capacity and the dynamics of a national economy. For example, studies from the U.S. clearly show that young, well-educated immigrants who come to the country as students or as highly qualified employees can create great added value in an economy. They have a high probability of being better paid than natives in the medium term. They are also more active in setting up companies. Such immigrants register about twice as many patents (in the U.S.) as natives. This already takes into account the fact that they disproportionately hold educational degrees in science and technology. A study from Norway used data from 500 Norwegian companies to examine the correlation between the employment of highly qualified foreigners and the innovative capacity of these companies. The results speak for themselves: foreign skilled workers increase their collaborative efforts with international partners and thus also the likelihood of product innovations.

Since the mid-1990s, immigration to Switzerland has focused on highly skilled workers. Highly talented international top executives but also workers in the service sector have since contributed decisively to alleviating the shortage of skilled labor. They have been able to counteract the effects of demographic aging, promoted the exchange of knowledge and have contributed to increased productivity and more tax revenues.

As demographic change is accentuating, the importance of foreign labor and skilled workers will increase even more in the future. Depending on the extent to which the domestic labor potential can be activated, there will probably be a shortage of around half a million workers in this country by 2030. It is not only the domestic labor supply that will shrink. The demographic situation will also worsen in countries such as Germany and France. These countries have so far served as large pools for qualified workers coming to Switzerland. Switzerland will therefore have less access to European skilled workers in the future. At the same time, it can be observed that global competition for skilled workers is increasing. According to a report by Deloitte and the Swiss-American Chamber of Commerce, Switzerland cannot keep up with other locations in terms of the framework conditions for the mobility of international top talent. This poses a major threat to Switzerland as a location for innovation.

A wide variety of efforts is needed to increase Switzerland's attractiveness for foreign specialists and to reduce the hurdles for companies as much as possible. This includes better exploitation of the potential for skilled workers from third countries, simplified retention of foreign students after graduation, fewer obstacles to cross-border internal mobility within companies, and greater digitization of approval processes. Switzerland is well advised to prepare for the future today and to alleviate the structural shortage of skilled workers and labor with preventive measures at an early stage.

Takeaway 5: Innovation does not work without qualified staff. Simple approval procedures and open access to global specialists is an important requirement for strengthening innovative power.