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Chapter Three Fresh Talent within shifting contexts

Introduction

3.1 As with all new initiatives, Fresh Talent has been positioned within an existing and far from static set of contexts. FT is located within a set of wider strategies and policies of the Scottish Executive, which meld together to focus on improving the quality of life in Scotland. Identified as a cross-cutting policy, FT has therefore helped to inform recent strategies and has itself been located alongside existing strategies.

3.2 FT has also identified contexts within which it is to be positioned. Its rationale is based around the need to: address demographic issues of declining population and an ageing profile; focus on migration and enhancing cultural diversity and cosmopolitanism; and emphasise talent to secure economic growth. FT therefore prioritises a number of challenges which need to be addressed.

3.3 In this chapter, FT is firstly placed within the policy context of action by the Executive. In mapping this, the wider significance of FT is highlighted across economic, social and cultural dimensions of life in Scotland. Second, the chapter reviews the changing significance of demography, migration policy, economic growth and cultural diversity. Together, this analysis offers some answers to questions over the necessity of the FT initiative and its principal rationales.

FT within the Scottish policy context

"Immigration yields the most significant benefits when immigrants are effectively integrated into the labour market and general society of the host country" (Hiebert and Ley, 2006, 4).

"The Commission for Racial Equality is concerned that there has been little focus on wider issues, such as: the readiness and capacity of Scottish business to attract and retain migrant workers; the impact of increased migration on public services and on existing ethnic minority communities; and the wider implications of Fresh Talent for Scottish society". (Commission for Racial Equality, 2005, 3)

3.4 Although Fresh Talent specifically addresses the attraction of New Scots and returning Scots, it nests into a variety of other strategies and policies launched by the Executive which aim to integrate migrants into Scottish society, and address some of those areas of concern raised by the CRE. Consequently Fresh Talent can only effectively be reviewed in its wider context - alongside approaches which focus on:

a) making Scotland a more attractive place to work and live and promoting these assets more effectively,

b) retaining and harnessing talent which exists within Scotland and nurturing new talent within the population of Scotland.

3.5 Figure 3.1 illustrates the main connections between the strategies of the Executive and these two approaches, with the Executive's strategies (in brown) nested under these two foci.

Figure 3.1 The wider strategic and policy contexts

Making Scotland more attractive

3.6 Under this focus, the Executive's approach has been two-pronged; improving the welcoming impressions of Scotland to visitors and migrants; and second enabling those coming to Scotland to live and work to be more integrated into Scottish communities.

First impressions

3.7 As part of the commitments in the New Scots document, the Executive commissioned a study into the First impressions of Scotland experienced by visitors. The Milligan Report provided recommendations relating to the quality of the welcome to Scotland experienced by visitors and how this might be improved at key international gateways (eg airports, road border crossings, main railway stations). In receiving this report, the Executive accepted all the review's recommendations and announced an Action Plan in May 2005. Under this, responsibilities and action were divided between Departments of the Executive, VisitScotland (the promotional arm of the Tourists Boards in Scotland), and by groups outside of government and its agencies. Each was to report in December 2005 with the intention of moving forward each element prescribed.

3.8 This strand is important in the context of Fresh Talent, as the Minister for Finance and Public Service Reform acknowledged in responding to the review:

"First Impressions leave a lasting impression and are crucial in helping us decide whether or not we will visit again - or, just as importantly, recommend that place to our friends and family" (Scottish Executive, 2005a).

3.9 There is also evidence pointing to the importance of previous, short stay visits in shaping future migration moves (see TNS System Three, 2006) and the strong impact of word of mouth from those experiencing a country in shaping others' consideration of this country as a migration destination.

A welcoming place to live and work

3.10 Moreover, other strategies and policies of the Executive impact on making Scotland a more attractive place for international migrants to live and work, especially in ensuring that such migrants are welcomed into an open, diverse society and are supported and assimilated into communities. To these ends, there are links to be made between Fresh Talent and:

• the Adult English for Speakers of Other Languages ( ESOL) strategy published for consultation in July 2005 which, for the first time, offered a national approach to the provision of publicly-funded ESOL across Scotland to complement the commercial English as a Foreign Language ( EFL) courses. The provision is aimed at assisting asylum seekers, refugees and members of the settled ethnic minority communities to integrate more fully into Scottish life. The strategy document is expected in 2006.
• strategies aimed at enhancing race equality. One Scotland: Many Cultures: working together for race equality and the 2005 Executive's Review of Race Equality work in Scotland both emphasise the importance of developing this aspect of cosmopolitan Scotland, albeit that neither explicitly refers to Fresh Talent.
• support for refugees and asylum seekers through the Scottish Refugee Integration Action Plan and funding from the Refugee Integration Fund.
• strategies aimed at reducing sectarianism and bigotry within Scottish society. The Executive published in 2005 its strategy on Reducing Sectarianism in Scotland following its high profile 'Summit on Sectarianism'.
• building inclusive communities which enable all members to benefit from opportunities. The Closing the Opportunity Gap objectives launched in 2004 aim to improve access to services for all and to reduce vulnerability in low income families. Although there is no single mention of FT, talent, retention, migrants or community integration, the Executive's Community Regeneration strategy is about responding to the needs of local people and creating opportunities from which they can benefit in terms of jobs, skills, training and employability.

Enhancing talent within Scotland

3.11 In relation to the second focus above - harnessing and nurturing talent within Scotland - the Executive has pointed to two key strategies. The Employability framework is being developed as part of the announcement in July 2004 to meet targets to help Close the Opportunity Gap. Intended to be an action plan at a national and local level, the framework will lead to a more coordinated response amongst Government agencies to getting people into work, and to stay within employment. The focus will be on increasing the chances of those vulnerable and disadvantaged groups throughout Scotland to gain and retain employment.

3.12 The second and existing strategy - A Smart, Successful Scotland ( SSS) - provides direction to the Scottish Enterprise Networks ( SEN) under the wider 2000 Framework for Economic Development in Scotland ( FEDS). It is designed to provide an integrated and coherent framework within which the promotion of Scottish economic development may be taken forward (Scottish Executive, 2004b). The emphasis under SSS is on growing businesses, developing learning and skills, and enhancing global connections. The priorities of the SEN are fostering business within Scotland; helping new businesses get underway; supporting and developing existing businesses; and helping people gain the knowledge and skills they will need for tomorrow's jobs.

3.13 In informing the working of the Enterprise Networks, SSS has been implemented in different ways within Scottish Enterprise ( SE) and Highland and Islands Enterprise ( HIE). Of relevance to FTI, both:

• have set up International Business Opportunities ( IBO) as a new online tool, designed to help companies find overseas partners. These aim to link overseas organisations with talented Scottish companies as partners and to provide assistance in making these connections work.
• publish a Global Connections Magazine for Scottish-based organisations interested in international trade.
• have developed GlobalScot as part of a new drive to build Scotland's international connections. This global network harnesses the talents, expertise and commitment of the many Scots and Friends of Scotland who are active in international business around the world.
• formed Scottish Development International ( SDI), a joint body run between the Scottish Executive and Scottish Enterprise. It replaced the agency's Locate in Scotland and Scottish Trade International operations. Under SDI, TalentScotland has been formed, offering information to the Design Electronics and Life Sciences industries in Scotland. This includes information about living and working in Scotland - "where to find a great job, company and academic activities, the lifestyle and practical help to make the move to Scotland".
• formed a Business Gateway; a partnership between SEN, Scottish Executive and Local Authorities, to support economic development in Scotland through an effective one stop shop to help grow or start businesses. This Gateway has a specific area on its website linked to Fresh Talent.
• offer awards and financial support to entrepreneurs and especially young entrepreneurs to develop ideas into realities. The Social Entrepreneurs Fund, SPUR and SMART awards, and Proof of Concept funding have all been made available to this end.

Beyond the two key strands: Other strategies

3.14 Recognising the impact of an ageing population, in areas such as pension, work, and services, along with contributions to society from older people, the Executive is currently consulting (as of March 2006) on key questions and issues arising from Scotland's demographic position. The focus is on issues associated with age and experience, and will inform a Strategy for a Scotland with an Ageing Population. This will sit alongside the Fresh Talent response to the changing demographic profile of Scotland.

Key external contexts shaping FT

3.15 This section considers these contexts, exploring not only their significance in shaping the formation of the Fresh Talent policy but also how evidence and debates in each are likely to shape the future trajectory of FT. These contexts are:

• the projected demographic shape of Scotland's population
• the UK wide approach to managing migration
• the economic and labour market in Scotland
• the nature of cosmopolitanism and relationships between cultural diversity and economic growth.

The demographic imperative

"Our first target must be to avoid our population falling below 5 million."

3.16 In presenting the Fresh Talent initiative to the Scottish Parliament in February 2004, the First Minister underlined the economic importance of population decline. He did so against the backdrop of a projected population decline below 5 million by 2009 (General Register Office for Scotland, 2004). Whilst there is widespread acceptance amongst those involved with FT that this threshold is more symbolic than economically important, the demographic imperative behind the FT announcement was stark:

"There will be fewer and fewer people of a working age. If left unchecked, this trend will have a serious impact on our country. Public services will become less sustainable, communities will become weaker, and our economy will suffer. This is a long-term problem that could affect every Scots family." (First Minister speech to SCDI, Spring 2003).

3.17 Since then, however, the demographic picture has altered. Based on the latest 2004 mid-year estimates, the Registrar General for Scotland has indicated that no longer is there the same immediacy to the reduction of the total population below the 5 million threshold. Commenting on the population projections published in 2005, Duncan Macniven said that:

"Scotland's population is projected to rise over the next 15 years - thanks to slightly more births, slightly fewer deaths and more people coming to Scotland than leaving. But we will still be an ageing nation, because our birth rate has declined since the 1980s. And our population is likely to fall from 2020, while the rest of the UK is on a rising trend."

Within these latest projections ( GRO(S), 2005), three issues are most pertinent to FT.

3.18 First, migration flows into and out of Scotland have a significant impact on the total population of the country. Between 2003 and 2004, for instance, there has been an increase of 21,000 in Scotland's population on the previous year. The natural decrease of about 4,000 (more deaths than births) was more than counterbalanced by an estimated net migration gain of around 26,000. The 2003-4 figures are also significant because, as the Registrar General for Scotland noted this year, they witnessed the highest net gain since 1952 when records were first kept in the current way. The key migration points for 2003-4 are:

• around 61,900 people came to Scotland from other countries in the UK and around 46,400 people moved in the opposite direction;
• including asylum seekers, around 36,300 people came to Scotland from overseas and around 24,600 people moved overseas.

3.19 The net gain in migration is thus composed of 57% movers within the UK and 43% from overseas. The extent to which such migration gains are related to short-term factors (such as the A8 entering the EU) or reflect specific initiatives is impossible to identify from these figures.

3.20 There is an assumption in the population projections that migration will continue to contribute positively to the Scottish population over the next few decades. Whereas the assumption in the projections at the time of the launch of FT (2002) had been for a decline of 1,500 per annum, net migration has been revised in the 2004-based projections to increase by 4,000 per annum. This assumption is based on the patterns for the last few years, the evidence of the International Passenger Surveys, and the forecast of continued in-migration from new member states of the EU. However, discussions with the Registrar General for Scotland revealed that this projection is based on a "mid-range estimate" and is significantly influenced by the recent net in-migration of the last few years. As he acknowledged, predicting migration levels is more difficult than predicting either fertility or mortality components.

3.21 Second, as Figure 3.2 below shows, the latest projections suggest that in the next decade the total population of Scotland will rise. Although the projections in 2005 point to a

Figure 3.2 Population projections for Scotland, 2001 to 2031

Source: General Register Office for Scotland (2005a)

different short and medium term population trend to that in 2003 when the First Minister outlined the FTI, these projections still point to a declining population over the longer-term. The symbolic population threshold of 5 million is now projected to be crossed in 2036.

3.22 Third, there remains a long-term trend of an ageing population in Scotland, where the proportion of children under 16 is declining and the proportion of working age (16-64/59) is also declining, from 63% in 2004 to a projected 59% in 2031. The resultant increase in those of pensionable age is marked (Table 3.1).

Table 3.1 Projected population of Scotland (2004-based), by age group: 2004-2031 (000s)

1 Pensionable age is 65 for men, 60 for women until 2010; 65 for both thereafter
Source: General Register Office for Scotland (2005a)

3.23 This population ageing is set to affect most OECD countries over the coming decades, with Scotland's increase in the ratio of 50% of people over 65 years to those of working age over the next two decades being typical. This demographic shift will be challenging for public finances, not just in tax revenues and pensions, but also in welfare expenditure as adjustments are made between support for the elderly and for schools, for example (Cotis, 2003).

3.24 In the context of Fresh Talent, the evidence indicates that it is arguable whether there is an immediate demographic imperative to overturn a downward trend in population postulated as one justification for the Initiative. On the other hand, the fundamentals associated with an ageing population remain pertinent and the population trend in Scotland is less positive than elsewhere in the UK, or much of the EU. Further, the latest projections do emphasise the long-term nature of the demographic issues being addressed by Fresh Talent and underline how even relatively small adjustments in the level of net migration to Scotland can impact on its demography . It is vital that continuing monitoring of migration flows into and out of Scotland is maintained and that FTI is informed by this.

Migration processes and emerging migration policy

Understanding migration to Scotland: patterns and process

3.25 Given the significance of migration in shaping the future level of Scotland's population and the focus of FT on attracting migrants to Scotland, what do we know about the migrants who have come recently to Scotland?

3.26 Migration management is a UK policy area (see below) most of the data about immigration is collected for the UK as a whole and relates to the point of entry into the UK. With most migrants having freedom to move anywhere within the UK thereafter, there is little specific data on the location of migrants within the UK. The exception to this is workers from the new Member States who for the first year of work in the UK have to register on the Worker Registration Scheme and notify the Home Office if they change employment. Consequently, other than through the national (decennial) Census, through specific surveys of samples of the population, or by National Health Service central register ( NHSCR), data on migration to Scotland is very limited and most information is based on a UK picture.

Figure 3.3 Origin of migrants to Scotland, 2001-2

Source: 2001 National Census

3.27 Although the overall pattern of net migration has altered since then, the 2001 Census offers a unique, insightful picture of the origin of migrants into Scotland within the previous 12 months. This snapshot indicates that, in total between 2000 and 2001, 76,691 people came into Scotland. Most of these (some 62%) were from other parts of the UK, but as Figure 3.3 represents - with each box being proportional to the numbers of migrants - there were significant flows from other parts of the world too, with Europe (excluding the UK) forming the second largest origin area.

3.28 This data source also highlights that, of these migrants entering Scotland, 1 in 4 were born in Scotland. This proportion is consistent across most continents. Only in Oceania, and specifically Australia, was the proportion of return migrants as high as 40%.

3.29 Beyond the Census, little information is available on the characteristics of the people arriving in - or indeed leaving - Scotland. The GRO Scotland 2004 report ( GRO, 2005) records that the 98,200 in-migrants to Scotland between 2002 and 2003 can be divided into those from the rest of the UK (61,900) and from elsewhere in and outside of the EU/ EEA (36,300). In contrast, little information is available on the 71,000 who migrated from Scotland during the same period. UK records indicate that 46,400 went elsewhere in the UK but no detailed information is available on the destination of international movers.

3.30 Research that informs part of the Executive/ ESRC sponsored studies on demography in Scotland will help to understand the nature of migration from the south east of England to Scotland. Other data collected as part of the FT initiative - for example, under the Working in Scotland Scheme or from the Workers Registration Scheme from the A8 countries - may add further to our knowledge of who is migrating.

3.31 Even less is known of the motivations of migrants who relocate to Scotland. Recently commissioned research by the Executive under Fresh Talent offers some initial insights here ( TNS System Three, 2006) and assists in filling this important knowledge gap. Based on interviews with recent migrants to Scotland, the study categorises re-locators into four broad groups:

• Economic/incidental pragmatists - for educational or economic purposes with their destination selected primarily by opportunity (place for study, job offer)
• World citizens - a more footloose group who take employment opportunities in Scotland to experience a new environment, but do not view this move as permanent
• Lifestage returners - Scots returning consciously associated with family and life course influences and opportunities, and taking up new economic opportunities
• Lifestyle/dream pursuers - those seeking a new lifestyle and living environment, either moving within the UK or choosing Scotland from the rest of UK as an overseas migrant.

3.32 Such categories are consistent with previous migration motivational studies and highlight the 'pull' factors of employment or educational study opportunities alongside quality of life factors and diasporic roots.

3.33 Together, all this evidence helps to provide, first, a rationale for the target groups within Fresh Talent and, second, some purpose for developing particular channels (Figure 2.1 above) along which to attract migrants. But it also reveals the limited knowledge about the motivations of migrants who choose to come to Scotland and the very poor quality data which is currently available to track migrants who enter Scotland. Research in this area is essential if FT is to be able to work effectively at attracting and retaining talent through migration.

Migration policy and entry schemes

3.34 The attraction of new talent into Scotland through migration is central to FTI. However, migration management is a reserved matter within the UK, under the auspices of the Home Office, and thus the Executive has to operate within UK and European Union ( EU) migration policy frameworks.

3.35 Within the UK, migration policy has focussed on managing flows of in-migrants through a number of schemes. At present, and of relevance to Fresh Talent, there are 3 main controls over channels of migration into the UK and thus Scotland:

• the work permit system, amounting to more than 82,600 permits being issued in 2004;
• the highly skilled migrant programme ( HSMP) - although attracting only c5,000 pa, Clarke and Salt (2003, 573) concluded that "the main significance of the scheme is its deliberate policy of encouraging entrepreneurs to make the UK their home and the message that conveys about the UK's attitude towards skill acquisition and global competition in a broad sense"; and
• the worker registration scheme ( WRS) which operates for citizens of the 8 central and eastern European accession states (the so-called A8) that joined the EU in May 2004. Between May 2004 and December 2005, there were 345,000 applications.

3.36 In addition, other schemes which have brought migrants to the UK include the Sectors Based Scheme (reduced since 2005 with the ending of the hospitality scheme), and more seasonal and time-limited employment under the Working Holidaymakers Scheme (c40,000 per annum), and the Seasonal Agricultural Workers Scheme (since 2004 EU enlargement the quota has been cut to 16,000 per annum). These schemes do not include the 294,000 students given leave to enter the UK in 2004. Further, there are other more selective routes: including, for the more highly skilled and qualified migrants, the Highly Skilled Migrant Programme ( HSMP), Entrepreneur and Innovator schemes.

3.37 Whilst these represent the official channels for migration, there are also migrants entering unofficially and those being classified as either refugees or asylum seekers, if they apply from within the UK for leave to remain on the basis of fear of persecution.

3.38 Beyond each of these, and under EU and international agreements, migrants also have rights and responsibilities (for example, under UN Convention on the Protection of the Rights of All Migrant Workers and Members of their Families).

3.39 As a consequence of this political landscape, the Scottish Executive is unable to devise its own migration legislation or to manage migration into or from Scotland without agreement from the Home Office in London and without complying with national and international legislation and agreements. There has therefore been considerable dialogue between the Fresh Talent policy team and the Home Office to enable specific FT schemes to be implemented where these include conditions associated with work permits, visas and leave to remain.

Emerging policy context

3.40 Significantly, since the inception of FT a major review of the UK's migration policy has been conducted by the Home Office. This review has been undertaken against a backdrop of a global increase in the scale of migration. On the one hand, this has reflected significant rises in refugee and asylum seekers moving between countries. On the other, it also reflects the growth of labour migration, largely because, since the 1980s, many countries have actively sought to attract migrant workers, with "the emergence of a global migration market, mainly for the highly skilled" (Dobson et al, 2001, 3). Together, these have put pressure on, and undermined confidence in, the current channels and controls into the UK.

3.41 With the aim of achieving greater public confidence in the immigration system, the Home Secretary published in February 2005 a five year plan on immigration and asylum (Home Office, 2005). This announced the intention of introducing a new points based system to manage oversee migration flows into the UK, including Scotland. More details of how the system will work were published by the Home Office in March 2006 (Home Office, 2006). The intention is that the system will:

• better identify and attract migrants who have most to contribute to the UK
• offer a more transparent, efficient and objective application process;
• improve compliance and reduce scope for abuse; and
• improve the UK's competitiveness and cultural diversity.

3.42 The proposals, importantly, offer scope for the specific needs of Scotland to be managed in support of FT. In particular, under the 5 tier framework, there are categories which are central to Fresh Talent:

• Tier 1, highly skilled individuals;
• Tier 2, skilled labour with job offers to fill gaps in labour force; and
• Tier 4, students.

The proposed system introduces the concept of sponsorship for Tiers 2 to 5. This makes an explicit link between the migrant and the sponsor, usually the employer or an educational institution. This recognises that it is the employer or institution that is best placed to take decisions on the suitability of the migrant and to take responsibility for ensuring that the migrant meets the terms of their leave.

3.43 Importantly, there is specific provision under Tier 1: Post Study for the Fresh Talent Working in Scotland Scheme ( FTWiSS ) to be able to continue to offer 2 years work opportunities without the need for a sponsor or job offer. Points for the main part of Tier 1 are designed to allow different combinations of attributes to permit entry into the UK. For example, someone under 31 will gain extra points that means that they will not be required to give evidence of such a high level of earnings as someone older who does not get points for their age.

3.44 Tier 2 focuses on skilled migrants with a job offer from a UK employer. Migrants will either need to have a job offer in a shortage occupation, as identified by the Skills Advisory Body, or if their job is not on the shortage list, be able to demonstrate that the employer has tried and failed to recruit an EU national. The provision of a specific Scottish Shortage Occupation List will make it easier for applicants with skills that Scotland needs to be attracted to Scotland - what the First Minister has termed "attracting the right people to Scotland" (Press Release, 7/3/06).

3.45 In contrast, existing schemes for low skill levels outside of the EU/European Economic Area ( EEA) will be phased out as such needs should be met from within the EU/ EEA. However, in order to retain some flexibility, there will be provision under Tier 3 for new quota-based low skilled schemes for temporary shortages as identified by the Skills Advisory Body.

3.46 This emerging process of managed migration raises issues for the FTI about what ought to be the primary focus for non EU/ EEA nationals. The new tiered architecture proposed by the Home Office categorises potential fresh talent by their individual skills levels, by skill shortages within the UK, and by a separation of EU from non- EU/ EEA countries of origin. Although there are assurances of a specific Scottish flavour within this structure (eg reduced period of settlement; Scottish shortage list), supporting the existing FTI programmes, the overall policy has its own specific characteristics (eg in terms of age and education levels) which define (by default) those migrants who can be targeted by the Initiative.

3.47 In contrast to other nations who have forged their own policies to manage migration, the Executive can only negotiate some local variations to the UK policy. There are, however, within this UK-wide and EU policy contexts opportunities for free movement to Scotland from elsewhere within the UK and EU. The managed migration proposals for the UK suggest that in the future FT will have to be about attracting talent amongst high skill graduates, in areas of skill shortages in Scotland, international students for short periods of time, and lower skilled groups within the EU/ EEA.

Economic growth and prosperity

"Fresh talent is a policy for the long-term growth of Scotland - it will continue to evolve and develop to meet our country's needs for our long-term growth and prosperity. It therefore clearly supports and complements the Executive's enterprise strategy, A Smart, Successful Scotland" (Scottish Executive, 2006a).

3.48 In their response to the Scottish Parliament's Fresh Talent Inquiry, Ministers reiterated that Fresh Talent initiatives were being developed in the context of the wider Scottish economic sphere.

3.49 Across Scotland as a whole, the labour market has been expanding and, in recent years, there has been a rise in skill levels and a reduction in unemployment. The Office of National Statistics indicates that total employment in Scotland increased from 2,269,000 in 1999 to 2,411,000 in 2005, reflecting growth in service sector employment and a decline in production and construction ( ONS, 2005a). Over this time period, unemployment fell from 179,000 to 147,000, representing 5.7% of those aged 16+ years who were economically active. Within the labour force, the skills level too has risen, with the proportion of those in employment being graduates rising from 17.1% in 1999 to 22.5% in 2005 ( ONS, 2005b).

3.50 The key messages from the recent labour market projections by the Warwick Institute for Employment Research and Cambridge Econometrics and from FutureSkills Scotland (Dickerson et al., 2004) suggest that:

• the overall size of the workforce has grown steadily since 1981, mainly due to more women joining the jobs market and is projected to grow only marginally between 2003 and 2008 by 1.4% to 2.55 million;
• most growth will be in professional occupations and in the service sector, with a decline in skilled trades occupations;
• there are likely to be 500,000 new job openings between 2003 and 2008 as a result of the need to replace workers leaving jobs (464,000) and as new jobs are created (36,000). More than half of these are expected to be in the most highly skilled occupations (managerial, professional, and associated technical and professional).

3.51 In terms of the current labour requirements, data from NOMIS indicates that, as of June 2005, there were 46,483 notified vacancies in Scotland, with the greatest number lying within relatively low skill areas of sales/customer services (22%) and elementary occupations (26%).

3.52 Alongside this, Futureskills Scotland surveys of employers also provide some key pointers to employers' assessment of the labour and skill shortages in Scotland. Their data point to less than half of all vacancies being classified as 'hard to fill' and only 1 in 4 were the result of skills shortages. Unsurprisingly, most of the hard to fill vacancies were in companies experiencing growth and amongst SMEs, but overall respondents indicated that attracting appropriately skilled staff was only a mid-level challenge, much less significant than increasing competition within Scotland.

3.53 More recent data point to a continuation of the trends of growing demand for staff and a drop in the numbers available to fill labour needs. The Bank of Scotland Scottish Monthly Labour Market Report for April 2006 reported the strongest rate of demand for staff over the past three years, with growth in Scotland outstripping that of the UK as a whole. This survey also noted a rise in skills shortages as the number of staff available on a permanent or temporary basis declined (Bank of Scotland, 2006).

3.54 These surveys point to the current and short-term future position of a growing labour market in which there are some, although not exceptional, skills gaps and hard to fill vacancies. However, there is also evidence that, in a growing economy, there will be a requirement for new labour, while the pool of those seeking employment is declining. In the short term, however, there is limited evidence of an imperative amongst employers to seek talented labour outside of Scotland. A key task for FT is to bridge this divide, encouraging business to look forward and to be more active in embracing talent from within and outside of Scotland.

The importance of cosmopolitanism and diversity in economic growth

3.55 The role which 'culture' plays in economic growth has been the subject of widespread debate (Gregson et al., 2001; Kong, 2000; Miles and Paddison, 2005; Pratt, 2004; Shields, 1999; Simonsen, 1999) and Scotland has not been immune to these discussions (Coyle et al., 2005). This discussion has fastened onto four alleged benefits which culture - loosely defined - might bring:

1. hallmark events and boosterist campaigns designed to renew patriotism and pride have been viewed as fostering national self confidence and encouraging greater belief when engaging with global capital and markets. Debate has been fuelled by the unscientific, but widely held suspicion, that Scotland suffers from a somewhat parochial and conservative outlook and that Scottish people lack a degree of self belief (Craig, 2003). Alexander (2003) has, for instance, encouraged Scotland to learn from the Irish experience where national confidence was an important precursor to the rise of the Celtic Tiger phenomenon;

2. local social networks, technology clusters, and knowledge communities, have been thought of as combining to create an atmosphere of entrepreneurship and innovation and have served as a catalyst for the rise of smart and dynamic economies. Therein, deepening the role of social networks and interpersonal relations in business has come to be thought of as an important ingredient in the development of new industrial districts and networked learning regions in Scotland;

3. 'culturalisation' of the economy has enhanced not only the contribution of the formal cultural industries to national income, but also the significance of companies reliant upon creative product design and trading symbolic goods in market places driven by consumption tastes and lifestyle dispositions. The commodification of culture and the aestheticisation of the economy have become important motivations for Scotland's new national cultural policy; and

4. there has been much debate in Scottish economic policy circles over the extent to which Scotland is cosmopolitan enough to attract skilled talent (Harrison and Mason, 2003). This debate has focused upon the work of Richard Florida's and the applicability of the so called 'creative class' to Scottish economic policy (Florida, 2002; 2005a; b).

Floridian thinking

3.56 The Fresh Talent Scotland Initiative has been alert to debates over the role of culture as a trigger of economic growth. Whilst all four of these debates resonate with Fresh Talent and contribute further rationales for its existence, perhaps it has been the last debate that has proven to have been the most influential.

3.57 According to Richard Florida, the quality of human capital in any place, and more particularly the membership base of the 'creative class' in that place, is now important in driving economic growth. Given the central role the creative class play, it is crucial that regions re-engineer themselves so that they offer the right package of attractions to these people. 'Cool places', which transcend distinctions between the bohemian and the bourgeois ethic, which provide 'low entry barriers', which offer 'plug and play communities', and which promote tolerance, diversity, creativity, and 'boho chic' will offer the greatest lure in the future. The policy diagnoses is for places to transform themselves from stuffy, conservative, insular, parochial, bureaucratic and stifling 'working class enclaves', 'boring post-industrial service centres' and 'high technology 'nerdistans', into liberal, bohemian, multicultural and culturally cosmopolitan hubs.

3.58 Against this backdrop, Florida claims that countries like Scotland might be capable of repositioning themselves in the global circulation of talent. Three areas need attention if it is to succeed.

• Workplaces that offer the freedom to breathe and to become: According to Florida, the creative class are at their best in the 'no collar workplace', where hierarchical and bureaucratic company structures and regimes of surveillance are replaced with new forms of 'soft control' which include self management, peer recognition and pressure, and intrinsic motivation. The creative class both contribute to and benefit from revolutionary changes in the workplace which seek to replace fossilised Fordist and Taylorist ways of working with flexible and stimulating working practices.
• Everyday life and the lifestyle and lifecourse 'morph': According to Florida, the creative class aspire to active and busy lifestyles that facilitate the consumption of new experiences and the 'deepening of the moment'. Concomitant with these new lifestyles, the creative class seeks to 'morph' orthodox conceptions of the life course and extend the leisure habits which have previously been associated with the 'twenty somethings' across the lifespan. Cities which are open to alternative ways of living out the life course, and which provide the soft infrastructure which underpins sensory and experimental consumption practices will be preferred by members of the creative class.
• Cosmopolitanism and borderless communities: According to Florida, the creative class thrives best in communities which are low in traditional forms of 'suffocating' social capital but high in forms of social capital which support easy entry, intense but shallow relationships, and acceptance of difference and individuality. Cities housing communities with porous borders are liable to be more attractive to members of the creative class than ones where strong communities render outsiders visible and subject to suspicion, judgement, inspection, and surveillance.

The culture and economy debate is a debate

3.58 Whilst Florida's work has come to be viewed as a ready made manual for urban and regional development, and whilst the creative class thesis undoubtedly has important policy implications, it is imperative to avoid overly simplistic readings of how culture might be utilised to promote local economic development. Florida's work has been criticised on a number of grounds, not least in terms of whether migrants really do come to places for their culture as much as for their capacity to offer career opportunities, and whether creative people really are able to exert a significant impact on economic structures, conditions, and trajectories that have been decades in the making.

3.59 The Fresh Talent Initiative is to be applauded for being alert to the thinking of leading economic regeneration practitioners and for seizing the contemporary zeitgeist which posits a fundamental relationship between culture and economy. Nonetheless, it needs to keep aware of the fact that there exists much debate in this area and that many critics are not persuaded that theses like that of the 'creative class' really do contribute towards the formulation of a purposeful way forward for countries like Scotland.

The need for a FT initiative

3.61 As noted above, the rationale for attracting fresh talent is based on a mix of demographic, economic and cultural imperatives, and over the past 2 years the emphasis given to each of these components has shifted. Taking each of the elements of the rationale in turn, this section explores whether they remain relevant.

Addressing the consequences of a declining and ageing population

3.62 Presented as a first and pressing context in which FT was located, there have been important shifts here. Rising in-migration and a small rise in birth rates have resulted in Scotland's population growing and being projected to grow for the next few years. Although subject to fluctuations around net migration flows, the immediate imperative to overturn a decline has been removed. Nevertheless, the fundamentals associated with an ageing population remain in place, and Scotland's demographic position is less secure than other parts of the UK or much of the EU.

Enhancing migration opportunities into Scotland

3.63 High levels of in-migration to Scotland over the past years indicates that thousands of people are able to take up opportunities to relocate to Scotland, and in the last 2 years this has more than offset out-migration. However, there will be changes to opportunities for in-migration associated with the Home Office system of managed migration. This will alter the balance between higher and lower skilled migration, and between EU/ EEA and other countries of origin.

Meeting labour shortages to sustain economic growth

3.64 Surveys of employers suggest that whilst there are some labour and skill bottlenecks, overall the labour market has been able to meet demand for employment. There is little evidence of an imperative amongst Scottish business to recruit overseas and to bring fresh talent to Scotland. However, both in the medium term, when the number of working age people in Scotland declines and at present, in relation to companies growing, there is a case to be made that additional talent is and will be required.

Increasing cultural diversity and cosmopolitanism of Scottish life

3.65 Openness to and acceptance of diversity is a positive sign of an outward looking and dynamic society and has a positive economic impact. However, the terminology is itself value laden and complex, opening additional questions about the nature of community and equality, for example. Further, the evidence that such diversity and cosmopolitanism influences flows of talent is at best debatable and increasingly contested.

Action Points

3.66 Taken together this review asks questions about the rationales which have been developed as the basis of FT. However, this does not detract from the fundamentals which led to the launch of this initiative. Economically, it is likely that there will be an increasing need for new labour and new talent in Scotland to sustain economic growth and offset rising dependency ratios associated with an ageing population. Second, in-migration is critical in sustaining population levels and to meet at least some skills and labour needs. Further, socially and culturally, Scotland needs to be connected globally and in-migration and exchanges between nations are important.

3.67 In short, there remains a requirement for attracting Fresh Talent to Scotland. However, in the shifting contexts outlined in this chapter, new opportunities exist to allow the FTI to evolve. These are considered in the next chapter.

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