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Chapter Six Key target groups: students and business

Introduction

6.1 As the previous chapter illustrates, Fresh Talent has generated considerable activity by the Executive and its partners. To date, however, FT has focused primarily on 2 of the 5 target groups - students and business. Taking cognisance of this, this chapter evaluates effectively different activities and strands weave together to assist attracting and retaining talent amongst these 2 target groups.

Prospecting for overseas students in a crowded market place

Launching Fresh Talent for students

6.2 Of the 5 groups which the Fresh Talent initiative has targeted as priority, to date students have received the greatest attention. Arguably, putting in place measures to attract overseas students is logistically more straightforward than putting in place equivalent measures for the other priority groups and therefore the early focus upon overseas students has been effective in launching and securing early momentum for FT. In addition, Scottish universities and colleges have for some time now been actively prospecting for an increased share of the overseas student market. For these institutions, FT has been a welcome asset and has helped to fortify the Scottish 'education offer' at an opportune moment.

6.3 More importantly, research from other countries that are also actively prospecting for overseas students (see for instance Ziguras and Law, 2006) suggests that an early focus upon students can bring additional benefits:

a) high fee paying overseas students are especially important in nations where education is a major export industry; in 2002-3, HESA suggested that fee revenue for overseas students to the UK brought £1.5 billion and generated a similar sum associated with student spend when studying in the UK;

b) graduates from the recruiting country's own universities and colleges are more readily employed within the indigenous labour market than foreign graduates;

c) international education is an economic sector that is attractive to the UK because it is knowledge intensive and high value added; students, by definition, possess higher levels of skills and aptitudes and therefore help to increase the recruiting country's pool of highly trained workers;

d) given that the majority of students are at the start of their working lives, students are best placed to sustain the number of working age adults; helping to address the ratio of working to elderly population;

e) students are potentially some of the most authoritative ambassadors and persuasive marketeers for not only an education establishment or system, but also a country. The student experience - and this includes not only their academic studies but also their daily living - is critical in forming and influencing their views.

A global market

6.4 Given these advantages, it is not surprising that competition to attract mobile students is becoming fierce. The 'Vision 2020: Forecasting International Student Mobility' study, conducted with support from the British Council, suggested that the total global demand for international student places will increase from about 2.1 million in 2003 to approximately 5.8 million by 2020, with demand for places in the Main English Speaking Destination Countries forecast to increase from about 1 million places to about 2.6 million places (British Council, 2004).

6.5 Competition to attract these international students is fierce and approaches are becoming more professionalised and it is in this context that the work of FT needs to be situated. The United Kingdom, the United States of America, France, Germany, and Australia remain the major providers of international education. However, as the British Council acknowledges:

"Technological innovations are changing the nature of learning. Today's international students are more technologically literate, have greater expectations and are harder pressed than their predecessors. Not only is international competition increasing rapidly, its nature is changing significantly. The global opportunities available will attract many new players, public and private, international and national, with innovative and different alliances and partnerships and new approaches to delivery." (Kemp, 2005)

6.6 Competition between the main English-speaking countries has resulted in a diversification of the modes through which international education is delivered. Four types in particular have now become routine:

• the relocation of international students to the degree provider country;
• the growing importance of 'remote' education through distance learning and on-line learning.
• the development of partnerships and collaborations with overseas institutions, with education provision through other deliverers; and
• the development of off-shore campuses and the relocation of staff from the provider country for a specific period.

6.7 Whilst all four are of interest to FT, clearly the focus of the scheme has been upon the first mode of delivery, the physical relocation of students to Scotland. Therein FT has focussed on ways in which to: increase the number of overseas students coming to Scotland to undertake educational courses; improve the quality of the student experience whilst in Scotland; and persuade more overseas students to stay on in Scotland to work after graduation.

6.8 In reporting upon the progress which has been made to date, this section is organised around three headings. Firstly, data establishing the flow of overseas students into Scotland will be examined. Secondly, the principal instruments which FT is deploying to meet its objectives will be introduced. Finally, based upon existing evaluations and interviews conducted with higher education partners, a number of areas where there might be scope for development will be outlined.

Overseas students studying at Scottish Universities and Colleges

6.9 The novelty of Fresh Talent initiatives in this area, allied with the natural time-lag through which education statistics come to be reported, means that data on student numbers at Scottish Higher Education Institutions ( HEIs) and Scottish Colleges ( SCs) largely predate the establishment of the scheme. In any case, even if such data were available, it would be premature at this point to judge whether FT has increased the number of overseas applicants to Scottish HIEs and SCs (see below for discussion on future measurement). The purpose of this section therefore, will be to examine historical data so that FT might be put into context.

Sourcing data

6.10 Data relating to overseas students taking degree courses in Scotland are collected by the Higher Education Statistics Agency ( HESA). Both the Scottish Executive's Department of Enterprise, Transport, and Lifelong Learning ( DETLLD), and the British Council (Education UK) have programmed these data for wider distribution.

6.11 Definitional issues mean that there can be some minor differences in the data with which each organisation works and all datasets require careful handling. Firstly, most commonly, students' home domicile (ie their place of residence prior to studying) rather than their nationality is used to provide a locational fix. Domicile has the potential to be misleading if applicants are, for instance, siblings of Scottish workers living abroad who are returning home for a Scottish education. Secondly, as noted above, Scottish Universities and some SCs deliver education internationally using a variety of modes. Students might be registered at a Scottish University for a degree but rarely (possibly never) set foot in Scotland.

Mapping international students in Scotland

6.12 In 2005, the Scottish Executive published a profile of students in the Scottish Higher Education sector for 2003-04 (Scottish Executive, 2005b). Included in their profile were both an overview of the origins of students by domicile (Table 6.1), and an assessment of shifts in catchment areas of entrants from 1998-1999 to 2003-04 (Table 6.2). Proceeding cautiously, some important points can be made about the context within which FT is working.

6.13 In 2003-04, there were 271,865 higher education students in Scotland, 80% (216,255) of whom studied in HEIs, and 20% (55,610) studied in SCs. Of those in HEIs, 70% (152,185) were domiciled in Scotland and 30% (64,065) elsewhere. For SCs, only 3% (1,830) were not domiciled in Scotland.

6.14 In the 2003-04 period, then, the total number of students with non-Scottish domiciles registered for a higher education course in Scotland was 65,895, predominantly registered with HEIs.

1 Of the 64,065 'non Scots' studying at a Scottish HEI, 41% (26,305) came from the rest of the UK, 17% (10,695) were from the EU (including the 2004 accession countries), and the remaining 24% (27,065) were from the remainder of the world. In the case of the 1,830 'non Scots' who were registered at an SCs, 39% (705) were resident in the rest of the UK, and 61% (1,125) came from overseas. Together, these figures highlight that the rest of the UK constitutes a core market for Scottish HEIs in particular. It is interesting to note that in 2003-04 only 13,290 Scots chose to study in another part of the UK, making Scotland a substantial net importer of students. In addition, Scottish HEIs enrol substantial numbers of overseas students and it is clear that their catchment area far exceeds the EU. Asia and North America remain important overseas markets for the higher education sector.

Table 6.1 Students in higher education at Scottish HEIs by domicile and location of study 2003-2004

Please note: rounding to the nearest 5: numbers may not sum to totals because of rounding.
Source: Scottish Executive, 2005b; Table 12

2 In 2003-04, 10,910 students registered for a higher education course from a Scottish HEI but studied wholly outside the UK. Only 15 of these students had a Scottish domicile and only 50 had a UK domicile, implying that this is not a phenomenon driven by Scottish or Scottish based UK students studying wholly overseas. It would seem possible to conclude therefore, that between 15% and 20% of 'overseas' students registered at Scottish HEIs are studying wholly outwith the country, via an alternative mode of course delivery.

3 Between 1998-99 and 2003-04, the number of entrants to Scottish HEIs grew by 14,815 (Table 6.2). The bulk of this (12,385) can be attributed to the growing number of Scottish domiciles who have availed of the expansion in higher education opportunities. Most also has been to undergraduate and sub-degree level, with postgraduate students accounting for only 13% of the increase. Interestingly, entrants from the rest of the UK have shown a downward trend, whilst in the overseas category, students from the pre-accession EU15 and from Asia have witnessed the largest increases, at undergraduate and postgraduate levels. Scottish HEIs are operating in an increasingly competitive market for both UK and overseas students and success in some markets has been tempered by a dip in others.

6.15 In summary, these statistics suggest that HEIs, in particular, are already significantly involved in attracting students within the core market for FT - those students outside of Scotland who apply and study for a degree in Scotland. In the 2003-04 period, HEIs attracted 65,895 non-domiciled Scots, of whom more than 27,000 came from outside of the EU. However, the largest market remained elsewhere in the UK.

Table 6.2 Entrants to Higher Education in Scottish HEIs by domicile 1998-99 to 2003-04

Source: Scottish Executive (2005b, Table 14).

6.16 The latest statistics pertaining to 2004-05 were published in May 2006. These data point to three main changes in the patterns identified above:

a) overall last year there was an increase (4,840 or 1.8%) in the total number of students studying at Scottish HEIs and SCs; from 271,865 in 2003-04 to 276,705 in 2004-05

b) a rise at HEIs of both Scottish domiciled students (4,025) and non- UK students (5,725 or 15.2% rise) more than offset a reduction of nearly 3,300 in the number of students at SCs

c) most of this increase in non- UK students at HEIs (4,700) was from non-European regions, although more than 3,700 were involved with studying wholly outside of the UK.

Consequently, within the 2004-05 period, there was an increase of less than 1,000 students attracted into Scotland from outside of the EU over the levels in 2003-04.

Understanding student location choices

6.17 Given the growth of global competition, it is essential that policy makers and institutions are well informed on the likely reasons why students choose to study outside the country of domicile. The British Council has identified 6 factors which affect students' choice of destination:

• quality of education provision
• future employment prospects associated with the education qualification
• affordability
• personal security and risk
• lifestyle
• accessibility of the education system

The British Council also concluded from their modelling that the first two factors on the list were of over-riding importance for the UK in offering a competitive advantage (Kemp, 2005).

6.18 To date, there is very limited research into the locational decision making of international students coming to Scotland. The Executive's commissioned study on recent migrants ( TNS System Three, 2006) included interviews with some postgraduate students and confirmed the importance of some of these factors, although the specific experiences of students are not explored in the research. Much more research is required if FT and its partners are to remain successful in attracting a high proportion of international students to come to Scotland.

FT : Specific student initiatives

6.19 With its focus on attracting students to come to study, live and work in Scotland, Fresh Talent has instigated a number of programmes. These can be divided into those which have been associated explicitly with FT and a set which have attracted support from FT, but which were initiated by other agencies or education bodies. The three core initiatives are:

• The introduction of the Fresh Talent Working in Scotland Scheme ( FTWiSS )
• Scottish International Scholarship Programme ( SISP)
• The Challenge Fund.

6.20 FTWiSS occupies central ground. This scheme is designed specifically to enable overseas applicants an improved chance of staying in Scotland for work after graduation. It has also been employed as a marketing tool to encourage more overseas applications in the first instance. However, FT has wisely augmented the Visa scheme with flanking supports. The Scottish International Scholarship Programme assists in marketing taught Masters courses overseas and recruiting the most able candidates, whilst the Challenge Fund helps to improve the student experience in Scotland. That FT has recognised the need to buttress the Visa scheme with additional measures is to its credit.

6.21 In addition, three further programmes with a different genealogy have important supplementary Fresh Talent dimensions:

• Scottish Networks International ( SNI)
• Dare to be Digital ( DARE)
• EDGE Programme

6.22 Much of the FT efforts to date have focused upon prospecting for talent beyond the EEA. Given the current funding of student places, this is politically understandable, but there are strategic advantages of supporting market strengths. However, FT is keen to harness the skills of graduates from other parts of the United Kingdom and the rest of the EEA and is aware that these areas remain more important overseas markets for Scottish Colleges and Universities.

FT: Developmental Opportunities

6.23 Given their recent origins, meaningful detailed evaluations of the core FT activities are only now being instituted. In contrast, given their relative longevity, detailed evaluations of the longer established supplementary programmes have already been undertaken. Against this backdrop, the purpose of this section is to review the 'package' of core interventions launched so far under FT with a view to identifying possible areas for future development. Discussion will be structured around two central themes: firstly the relationships which FT has developed with the higher education sector and the extent to which the partnership is working; and secondly, the research and information gathering which will be necessary in the future if sufficient evidence is to be available to judge the longer-term impacts of FT as a whole in relation to international students.

Partnership building with the Higher Education sector

6.24 The Fresh Talent team have successfully enlisted the support of the key Further and Higher Education Institutions in Scotland. There is a definite sense that Principals and Senior Officers are very supportive of both the concept of FT and its more specific initiatives. Of course, there has been a timely coincidence of interests. As noted above, Scottish universities and colleges are very aware that they are now operating in a highly competitive but lucrative market place and indeed for some time now have been putting in place strategies designed to maximise market share. FT has been viewed as a timely and helpful asset in these efforts. The importance of supporting FT has been a message which has strongly permeated into service departments within the HEIs and SCs and is exerting a strong influence on practice.

6.25 In particular, International Offices within HEIs and SCs have presented FT schemes and scholarships prominently on their websites and within their published information. Most have also provided insights into the rationale for FT and have illustrated how international students are being supported within their own institution.

6.26 Whilst virtually all service departments and personnel express solidarity with the objectives of the scheme, some do have concerns about the practical aspects of its implementation. There remains an issue about the extent to which the Fresh Talent team can continue to engage and enthuse service departments further down the command and control chain within Scottish colleges and universities. Nevertheless, many of the concerns demand responses not just from the FT team but also from service departments themselves and from universities and colleges more widely. With the co-operation of all stakeholders it will be possible to work towards their resolution. Among the most important areas of concern which service departments raised were:

Relations with Careers Services

6.27 There would appear to be scope to improve the relationships which exist between FT and Careers Services. Some careers officers felt that FT was launched with insufficient consultation with the Association of Graduate Careers Advisory Services ( AGCAS) [Scotland]. This created some initial difficulties since Careers Services were being asked questions from overseas students prior to FT providing them with information about their various programmes. In spite of now being in possession of more facts, some AGCAS members feel that there remains scope for closer dialogue between FT and Careers Services. The formation of the FT Virtual Forum in February 2005 was one response to this and has assisted dialogue between members including AGCAS, the British Council, Scottish Universities International Offices Group, Strathclyde Region Advisors to Overseas Students ( STRATOS) and the FT team. These developments are promising and ought to be developed further.

Student expectations

6.28 There is a need for all stakeholders to manage student expectations better. Many overseas students seem to have an inflated understanding of the labour market opportunities which Scotland might provide. Some come to Careers Advisers in the expectation that high quality employment is "virtually guaranteed" and that Careers Services have an obligation to place them in good jobs. The reality is that, with the exception of some sectors in some parts of the country, graduate employment is highly competitive and there is a general scarcity of job opportunities. Graduates are often under-employed if not unemployed for some time after graduation. There is a concern that when the reality hits home, students might feel disappointed and embittered that the image they had prior to arrival has failed to materialise. This concern was raised at initial stages of the FT initiative by AGCAS (Management Committee, April 2004) who are concerned about "the dearth of opportunities for graduates and the need to support home as well as overseas graduates in making successful careers in Scotland".

Using fee income to support FT

6.29 There is a need to address the question of the distribution of fees from overseas students within universities. The rise in the number of overseas students is proving to be increasingly burdensome on some service departments who have been expected to deal with increasing workloads without a corresponding increase in resources. Overseas students require substantially more reassurance, guidance, practical assistance and support than indigenes when applying for jobs. In addition, when they fail to secure an appropriate job they revisit Career Services for advice on the labour market back home. Lacking expertise in labour markets in countries of origin, Careers Services are having to conduct primary research from scratch and create in some instances new web resources. Universities clearly benefit from the increased fee income which overseas students bring. All stakeholders should work together to ensure that given this new revenue stream, services are provided which are commensurate with quantitative and qualitiative increases in student demand for advice and assistance.

Scotland or the UK?

6.30 There is a concern that whilst there is an expectation that graduates will stay and work in Scotland, it is not illegal for them to work elsewhere in the United Kingdom. Advisors are often asked this question by students and at best resort to an argument about the moral expectations that students accept when applying. The possibility that some applicants might deliberately or inadvertently be using FT:WiSS as a channel into the wider British labour market is a concern worthy of noting and monitoring at this early stage.

Timing initiative launches

6.31 The timing of the introduction of the Challenge Fund (announcements made about awards in September at the busiest time in the academic year) has meant that it has been quite a challenge for institutions to get programmes up and running this year. Given that there is an expectation that funded projects will create sustainable practices for at least two years post funding, there is a concern about the workloads that will need to be maintained in the forthcoming two years. Consequently, there is a sense that fewer bids might be submitted for the forthcoming funds and that the quality of bids might not be as good second time around. To counter this concern however, ASCOL report that it is likely that colleges will submit even more bids in 2006-2007. However, the majority of international students are located within HEIs and any reduction in bids to support these areas will reduce the impact of the Challenge Funds.

Further research opportunities

6.32 If the effectiveness of FT's approach to support the attraction and retention of overseas students is to be measured at an appropriate point in the future, it will be important that a number of gaps in the current research base be filled. Three areas of research in particular present themselves as being of primary importance:

• quantitative assessments of changes in overseas applications;
• qualitative research into the experience of overseas students who relocate to Scotland; and
• quantitative assessments of the pathways taken by students who have successfully applied under FTWiSS .

6.33 If attracting more overseas students to Scotland continues to be a complementary objective of FT, then shifts in the number of overseas applicants registering at Scottish HEIs and SCs over time will be an important barometer. In time, it will be necessary to undertake more rigorous research into Scotland's changing share of the international market. Both the DETLL and the British Council's (Education UK) programming of the HESA data makes possible very detailed market analyses. This includes more complex cross tabulations and modelling of changing numbers of arrivals through time in terms of the specific countries they come from, the level they are studying at, their subject, age group, fee status, mode of study, institution of study, extent to which they are only visiting or on exchange, and their gender.

6.34 If improving overseas students' experiences whilst in Scotland continues to be a central objective of FT, then gaining insights into students' encounters with Scotland, including their embroilment in specific FT programmes, will be an important barometer. Some valuable work has already been undertaken to this end by TNS Systems Three (2006), but the student experience was considered a part of a broader relocation population and the results are pertinent only to the early stages of the scheme. There would seem to be merit in setting in place a longitudinal study NOW, so that a relatively small number of students could be tracked from the moment of application to, if appropriate, their passage through the Fresh Talent: Working in Scotland Scheme and perhaps even onto a Work Permit.

6.35 If encouraging more overseas students to stay on in Scotland to contribute to the labour market continues to be a central objective of FT, then the fate of those students who have been awarded leave to remain visas under FTWiSS will be an important barometer. Currently, HESA funds Careers Services at Scottish universities (and colleges) to track student's employment records six months after graduation (80% response rate). To date, funding has been provided for UK domiciled and EU students only. It is possible to debate whether HESA ought to provide additional funding or whether universities ought to redistribute fees from overseas students to extend this research to extra EU students. Nonetheless, given that they only possess students' address of domicile, it is logistically impossible for Careers Services to contact overseas students who stay on in the United Kingdom, including those in possession of FTWiSS visas. The FT team have conducted their own survey tracking the trajectory of FTWiSS participants visa holders through time and the intention is to repeat this survey every six months. From a population of 1516, a total of 433 responses have been received from the first round (28% response rate). The data are currently being analysed and the first results are due in the summer of 2006.

Action points

6.36 Based upon the above analyses of FT's ongoing programmes designed to attract and retain overseas students, six main action points present themselves. These action points require responses not only from the FT team but from all stakeholders:

1. There would appear to be scope for FT to forge stronger working relationships with service departments in Scottish universities. In particular there might be merit in FT and AGCAS forming a stronger partnership when programmes of mutual interest are being conceived, launched, and managed (perhaps through the Advisory Group);

2. A fine balance has to be struck between aggressively selling Scotland to overseas students in a highly competitive market place, and overselling Scotland. The expectations of overseas students needs to be managed carefully to avoid the scheme rebounding on universities and colleges and the Scottish Executive;

3. The reluctance of some employers to appoint overseas students might be alleviated by: a) investing in schemes at opportune time windows designed to improve overseas students command of English, and b) advocating and simplifying the methods through which FTWiSS visa participants holders might pass on to other immigration schemes including the Highly Skilled Migrant Programme and/or Work Permits;

4. In time, more detailed analyses of market trends might be made. It will be impossible to gauge whether any changes in particular kinds of student demand have been caused by FT but it will be valuable to assess whether trends are going in the right direction and by what degree;

5. There is a need to commission a longitudinal qualitative study tracking the experiences of students who navigate through the Scottish education system and FT programmes in different ways. It might be that this research could be integrated into a wider Challenge Fund bid in 2006-2007; and

6. It is recommended that decisions are reached as to who ought to be responsible for financing and collecting information on the career trajectories of extra EU students who have graduated from Scottish Universities and Colleges. At present, there is a gap and the only data which is available is that collected by the FT team tracking FTWiSS applicants. Until this matter is resolved consideration might be given to the questionnaire FT uses, the method of distribution and collection, and the advanced cross tabulations and modelling which might be possible given the existing data (eg salary levels, nature of employment). This is the most valuable data set in existence and as such it might benefit from nurturing at this point.

Bringing talent to business

6.37 FT's direct involvement with the business community has been recent, more limited and less focussed in scale than the activities addressing the student target group. Nevertheless there are a number of activities that have been developed to support business. These include:

a) a business dimension to RAS through the secondment of a Scottish Enterprise member to the team;

b) linking business into the Scotland is the place website; and

c) the publication of a toolkit to guide small businesses through the work permit scheme.

In addition, SE Dunbartonshire's EDGE Programme (as well as connecting with students) is a business-related project supported by FT given its focus on encouraging entrepreneurship.

6.38 The main involvement of FT in supporting business to attract fresh talent comes more indirectly through schemes which link students with work (eg work placements linked to SNI or through DARE), the provision through FTWiSS to enable graduates to find employment in Scotland without the requirement of a work permit and advice and assistance on how businesses can navigate the current immigration system. There is also an important role in educating businesses about the new points based system as it is developed and tested. This latter assistance is not insignificant, given that employers find the current system time-consuming, complex, cumbersome and bureaucratic and even when employers have experience of the system, they complain about it being lengthy and inefficient (Dench et al., 2006, 7).

Partnership working in a crowded arena

6.39 In contrast to the scope available to FT in the area of international students, FT's 'action space' for new initiatives is more restricted, as there already exists considerable effort and support to business from the Executive through the activities of the Scottish Enterprise Network. Consequently, for FT to be supportive, it has had to develop a different form of partnership working, with SEN and others, than that adopted in relation to HEIs and SCs.

6.40 First, the channels through which business in Scotland already engages with Executive strategies and policies are well established being at the core of the rationale of Scottish Enterprise, Highland & Islands Enterprise and partnerships, such as SDI or SCDI.

6.41 Second, channels through which business attracts talent outside of Scotland are also already well established for many organisations who currently recruit internationally. The migration of 'talent' into (and out of) Scotland occurs through the internal labour markets of large global companies and globally networked companies (Figure 2.1). They and others employ recruitment agencies to assist and support their recruitment and most already have experience of applying to the Home Office under work permit and visa schemes. It is debatable whether FT can influence significantly such flows or indeed if such business would require or welcome FT involvement.

6.42 Further, there already exist entry schemes to the UK which aim to attract very highly skilled migrants, either as innovators or entrepreneurs, and there exists business networks in existence between Scotland and other parts of the world through areas such as GlobalScot.

6.43 This limited 'action space' is further reduced by business' perception that FT is about meeting the needs of particular economic sectors (eg high tech, engineering, creative industries). Consequently, there is a risk that the typical SME thinks that FT has no relevance to them.

Who is the client for FT?

6.44 Indeed, there are fundamental issues over to whom is it selling and what are FT's selling propositions? In terms of target groups, FT seeks to work with 3 business components: people seeking employment; Scottish business looking to recruit from overseas; and entrepreneurs and self-employed looking to start up businesses in Scotland. Each 'client' group has different demands and asks for different support and intervention by the Executive under FT. To date, initiatives under FT have focused on the first 2 client groups.

People seeking employment

6.45 FT has assisted this group primarily through a strategy of facilitating entry into the UK and thus providing opportunities for individuals to find employment in the Scottish (or UK and EU) labour markets. Both FTWiSS for graduates and the wider RAS operate to inform, support and enable access to Scotland, via entry to the UK, for such talent. However, FT is not about matching skills with vacancies, or entrants to employment. This remains either the responsibility of other agencies (such as SEN) or, more generally, the private sector where recruitment agencies and others are key players.

6.46 Further, given the migration policy context in the UK and the EU, FT has focused primarily on supporting talent from outside of the EU/ EEA, mainly within markets which have traditionally not been principal sources of labour and which are now growing (eg India and China). There has been some specific support for groups in the EU, through the WRS associated with the accession of the A8 countries in 2004 and promotional work in Poland.

6.47 FT support for this client group has operated only to assist them to enter and experience Scotland, but has not been focussed on addressing specific groups of individuals to match up with any specific labour or skills shortage in Scotland.

Businesses in Scotland

6.48 The extent to which government should intervene in labour markets and exactly how such intervention can be effective reaches right to the heart of politics, with fundamental ideological differences existing between and within states.

6.49 In the current Scottish political and economic context, where FT's role is to support economic growth, for FT to intervene effectively in the labour market there are a number of issues:

• Just what can FT offer to business in terms of products and services which are not already provided by the market or other agencies? Can one product/service 'fit all' or are the needs of the business community too diverse?
• What proportion of Scottish businesses have a need (whether articulated or latent) for FT's products and services? How many have serious skill or labour shortages?
• How many employers would consider solutions which involve recruiting workers from outwith Scotland? And what action can be taken to overcome barriers to such recruitment?
• Can, and should, FT also meet the needs of other employing organisations in Scotland, notably the public sector (which is responsible for around half of all jobs in Scotland) and the voluntary/charitable/not-for-profit sector?

6.50 There are important and related links between each of these questions and an assessment of whether FT can intervene effectively to support economic growth. The following section considers the answers to each in turn.

FT services to business

6.51 At present, FT's primary services are:

a) assisting businesses within Scotland that may lack the resources, or the confidence, to navigate the visa and work permit system - through directing them to the immigration expertise contained within the RAS and offering advice through the employers' toolkit; and

b) stimulating more businesses in Scotland to recruit staff from overseas - primarily by selectively introducing business to talent (eg through DARE, EDGE, SNI placements) through events in conjunction with Scottish Enterprise to the top 100 indigenous companies in Scotland, events in conjunction with SCDI to businesses looking to find out more about Fresh Talent and the current and new immigration systems and, more generically, through education/promotion via websites (eg Business Gateway) and marketing (eg Business Insider) highlighting success stories and experiences.

c) Generating a new pool of talent of overseas students who are available for employment through FTWiSS .

d) Supporting international networks (eg GfoS, alumni) through which business can make contacts with others internationally.

6.52 In providing these, RAS, as noted in Chapter 5, does not attempt to offer a tailored service. There will therefore always be tensions between the differentiated and at times specialised needs of business and the generic advice and support available under FT. Of course, specialised advice in relation to international markets is available elsewhere - from SEN, or Chambers of Commerce, for example. Nevertheless, it is unlikely that RAS can offer tailored advice to businesses of different size (turnover and workforce), sectors or organisational structures. FT has focussed on SMEs who are likely to have least experience and resources to manage international recruitment internally.

6.53 In so doing, FT supports a particular form of migration; one that emphasises the physical and permanent relocation of talent to Scotland. Amongst larger and international organisations, however, shorter term mobility, and internal transfers also provide productive ways to enhance flows of talent.

Future shortages of skilled labour in Scotland?

6.54 Futureskills Scotland surveys of employers offer evidence of the current position amongst employers across Scotland. Based on the surveys of more than 7,500 employers, the 2004 Skills in Scotland report indicates that, in a growing economy in which new developments are taking place, there are some skills and labour shortages (Futureskills Scotland, 2005a).

6.55 However, the presence of some vacancies and some skill needs is an inevitable outcrop of a dynamic and vibrant economy. The surveys suggest that skill shortages were not limiting businesses. First, in relation to vacancies, the research points to a vacancy rate of 1.7%, and of this (equivalent to 73,400 posts) 46% were 'hard to fill' and a quarter were classified as 'skill shortage' vacancies. Such skill shortages affected fewer than 5% of all employers, typically those who were growing, were smaller workplaces and were involved in skilled trades and sales/customer services. In the context of Fresh Talent, the Futureskills research points to employers with hard to fill vacancies indicating that they often have had to "change their recruitment practices, including using a wider range of recruitment channels than normal to find a suitable candidate." (Futureskills Scotland, 2005a).

6.56 Second, in relation to skills gaps (ie a current employee not being fully proficient as judged by employers), the surveys indicate that 20% of workplaces experienced a skills gap, affecting 182,000 employees (9% total workforce). For most employers skills gaps had little or no negative impact of their business. Gaps, however, were most frequently occurring in hotels and restaurant industry and in parts of the public sector and these were of greater significance in inhibiting activity.

6.57 Whilst this current position can be interpreted as "the market working effectively to fill vacancies" (Futureskills Scotland, 2005a, 7), it is also possible to argue that businesses have lowered their ambitions, adjusted their strategies and capital investment to accommodate current skill levels. Under this 'low skills equilibrium' scenario, the skills mix at present is limiting business from reaching their full potential: "the workforce might be fit for purpose but not for higher value purposes" (Futureskills Scotland, 2005b, page 10). The solution, however, may not be for higher skills, but for higher productivity to gain benefit from the existing skills base.

6.58 Together, this evidence highlights the importance of making better use of the existing skills levels within the current labour force in Scotland and also the selective and limited nature of any skills shortages in Scotland.

Employers' views of migrant labour

6.59 Drawing both on previous studies in the UK and their own primary research of employers in England who have recruited migrant workers, Dench et al.'s (2006) study offers some important insights into how business has and might engage with FT and, second, what role FT and its partners might have in enabling the attraction of talent to Scotland.

6.60 There appears to be a general acceptance across business that the UK economy relies on a significant number of skilled migrant workers. The actual proportion varies between sectors with some, like agriculture, construction and the hospitality/catering sectors, being heavily reliant on flows of in-migrants, often employed for short time periods. In last 2 years, these sectors too have relied heavily on the employment of Central and East European migrants entering the UK under the WRS, attracted by their 'work ethic' and their education and skills levels (Anderson et al., 2006).

6.61 We summarise here some of the most relevant components of these two recent research reports from the perspective of employers:

The importance of migrant workers

• Fill skill gaps and hard to fill vacancies
• More crucial in low skill sectors

The strengths of migrant workers

• More motivated, reliable and committed than domestic workers
• Favourable work ethic encouraged domestic workers to work harder
• Widened horizons of domestic workers with new ideas, thinking and cultures

The disadvantages

• Language barrier - especially in relation to health & safety
• Integration between different cultural groups of workers

Recruitment

• Many argued that they simply reacted to the pool available and sought to recruit the best qualified applicants, regardless of nationality

Exploitation and skills

• The skill and qualification levels of migrant labour often exceeding job requirements
• Some anecdotal reports of some employment on lower wages, longer hours, fewer employee rights

6.62 The clearest conclusion from this and previous research in Northern Ireland (Bell et al., 2005), in north east Scotland (Solutions, 2005) and in Norfolk (Taylor and Rogaly, 2004) was that most employers did NOT set out to recruit migrant workers - they reacted to the pool of labour available. In short:

• most employers are neutral to overseas employment; not seeking migrant labour, but accepting it if fitting their needs
• such recruitment is primarily to fill skill gaps
• most gaps are in the low-skilled labour market
• if language barriers can be overcome, there are clear work ethic advantages of migrant labour.

Voluntary and public sectors

6.63 To date, most of the information provided under FT, through RAS, the Scotland is the place website and at events supported overseas, the emphasis has been on working with private sector business and employers. It is important that the needs of other employing organisations in Scotland, notably the public sector (which is responsible for around half of all jobs in Scotland) and the expanding voluntary/charitable/not-for-profit sector could also be addressed. In Scotland, there are acknowledged skill shortages in both areas of public services (eg care sector) and in the voluntary and charitable sector ( NCVO, 2003).

Connecting students with employers

6.64 Within its emphasis on international students, FT has opened up opportunities for students from overseas to be employed in Scotland. However, from interviews with those in the careers services charged with connecting graduates with employers a number of concerns have been registered. There is a perception among some careers officers that insufficient consultation with employers prior to FT student schemes being launched has created difficulties for those attracted under FT to gain employment. In particular, these officers perceive that:

1. not enough employers know about the scheme and appreciate what benefits it might bring to them.

2. for some employers two years is not long enough under FTWiSS . The average graduate training programme lasts for about 18 months so a lot of time and money is spent and then the employee has to return to their home country or switch to another scheme and few employers seem willing to get involved in the immigration system.

3. FT has been indiscriminate in its recruitment of overseas students and has not targeted markets that are capable of yielding skills appropriate to the genuine bottlenecks in the labour market.

4. employers taking on overseas graduates often need to organise a suitable induction programme. All stakeholders, including employers themselves, need to be aware of the limited development of these induction programmes to date and the extent to which the absence of an induction programme might be responsible for the reluctance of managers to take overseas graduate students on board. There might be a need to resource training on how to organise induction.

5. language is the single biggest hurdle that faces many overseas graduates when competing in the labour market. Of course, all must have met the basic TOEFL or IELTS requirements to get on to courses, but spoken language and even written language in the form required by companies is different again from what students learn at universities. Graduates in some sectors such as engineering might be able to cope with limited English, but clearly those wanting to go into managerial roles or marketing roles or human resources roles often require an advanced command of the English language.

Entrepreneurs

6.65 The attraction of entrepreneurial talent in the UK is already a clear priority, with UK Trade & Investment being the lead UK Government organisation helping businesses locate in the UK and grow internationally. This is supported by the Highly Skilled Migration Programme ( HSMP) for entry to the UK. The HSMP has evolved since its launch in January 2002 to widen its scope and encourage younger, well qualified and experienced individuals and their dependents to come to the UK.

6.66 Whilst the HSMP is not specifically for entrepreneurs, there are number of entrepreneur-friendly immigration programmes. The Business Ownership programme allows people to live in the UK if they are establishing or taking over a business. Amongst other requirements, they must invest at least £200,000 of their own money in the business and create or maintain at least two full-time jobs. To date, this has attracted over 100 entrepreneurs to the UK but is a relatively limited scheme. The Innovators Scheme launched in 2000 is open to a wider group. It is designed for entrepreneurs with proposals for setting up a new business which will bring economic benefit to the UK. Under this initiative, the applicant does not have to invest personally in the business and is fast-tracked for entry to the UK. In addition, there are opportunities to gain access to investors providing capital for new developments.

6.67 There are also some sector-specific programmes. The UK T&I Global Entrepreneurs Programme provides assistance to entrepreneurs in the life sciences and information & technology sector to establish new businesses. At the heart of the scheme is the linking of individuals with established 'dealmakers' to assist guiding ideas to fruition.

6.68 As immigration is a reserved area of responsibility, all of these schemes are relevant to entrepreneurs considering Scotland as a location. There are no specific Scottish schemes, but support for entrepreneurs considering Scotland can gain information, advice and assistance from the Scottish Enterprise Network. The TalentScotland website acts as a gateway for this service, providing both advice on support and opportunities and news about successful developments.

6.69 This has been supported through funding packages made available for entrepreneurialism and innovation. The SMART, SPUR and SPURplus awards are targeted at promoting innovation, encouraging existing companies to enhance their products and processes through innovation and help to facilitate the formation of new leading edge businesses. Two further Scottish Executive initiatives, SCORE and SEEKIT, are specifically aimed at encouraging greater co-operation between SMEs and the Science Base, and in addition, the Scottish Executive is a key sponsor of Knowledge Transfer Partnerships, helping business to develop and grow by accessing the wealth of knowledge and expertise in the UK's universities, colleges and research organisations. The £33m allocated under the Proof of Concept Fund for 'ground-breaking' projects enables them to germinate.

6.70 The attraction of this talent is rightly one area in which FT needs to be supportive. Research suggests that founders of new firms are more likely to be in-migrants. Levie's recent analysis indicates that immigrants to the UK and within- UK regional migrants are more entrepreneurial than long-term residents (Levie, 2005) pointing not only to the non- UK migrant as important, but also those from elsewhere in the UK. It is difficult, however, to envisage further specific initiatives which can be undertaken that would attract many more overseas entrepreneurs. The focus on 'potential entrepreneurs of the future', through specific graduate schemes such as EDGE or DARE, represents added value to those of SEN and UK T&I.

6.71 There are a number of challenges to be faced in targeting this group, on which the evidence from other countries who also seek to attract entrepreneurs and immigrants with business ideas, can assist. First, very few entrepreneurs relocate (even to the next town, never mind a different country) specifically to set up a new business. Most migrant entrepreneurs move to another country for job reasons and subsequently set up a business. And most of these businesses are small to medium size enterprises. Consequently, the success of translating the talent into entrepreneurial activity has been shown to be dependent on being part of local networks - or embeddedness. As in-migrants take time to generate such networks, research in Australia (Collins, 2003) and Canada (Frouschauer, 2001; Ley, 2003) highlight the importance of internal policies by the state and local business communities in facilitating the entrepreneurial activity of these in-migrants. Therefore, for FT support to enable this lubrication - language training, assisting with set-up bureaucracy, personal development training courses - may be as important as attracting such potential entrepreneurs into Scotland.

FT: developmental opportunities and action points

People seeking employment

6.72 There is scope for FT to assist further in supporting people into employment in Scotland. This could involve adapting some of the approaches currently applied to students to employees; for example:

• creating an effective web-based market place for businesses seeking to recruit workers and individuals looking to move to Scotland (or the UK) to work so that they can 'meet'. This may be a function for the Scotland is the place website and could involve a voluntary register be generated of those interested in working in Scotland
• Providing or linking with an after-care service for individuals and families who do move to Scotland to enable them to settle in quickly, thereby increasing the likelihood that they will be retained

Changing employers' attitudes

6.73 Together this evidence sets out some of the challenges faced in relation to FT if it aims to focus on employers as its client. Whilst there is merit in informing and educating the business community on how to recruit overseas to overcome skill shortages, to de-mystify the visa/work permit system and lubricate recruitment channels into foreign labour markets, and provide a source of expertise to companies and individuals with work permit/visa problems, this is unlikely to be sufficient to increase significantly opportunities for in-migrants.

6.74 More fundamental mind shifts are required. In particular, employers in Scotland - and especially those mainly smaller companies who have had no experience of overseas labour - need to be exposed to fresh talent, enabling them to gain positive, first hand knowledge of this talent. This could include:

• greater involvement of businesses in Scotland within the global networks already in place. This could make them more aware of the nature and skill levels of those overseas and also highlight their affinity to Scotland and support for the Scottish economy.
• provide more opportunities for international students studying in Scotland (either under FT schemes or more generally) to have opportunities on work placements. Given their linguistic abilities (necessary for entry to HIEs and SCs) this would assist to overcome the perceived language barriers of employers and expose them to strengths of migrant labour.

6.75 In addition, there needs to be more opportunities to connect employers (and their needs) with overseas fresh talent who want to move to Scotland, in order to explore opportunities to relocate to Scotland. This could involve:

• creating an effective web-based market place for businesses seeking to recruit workers and individuals looking to move to Scotland (or the UK) to work so that they can 'meet'. This may be a function for the website Scotland is the place and could involve a voluntary register be generated of those interested in working in Scotland
• make greater connection between graduates supported under FT with employers and with expansion of schemes such as DARE and EDGE that make such connection.

6.76 To counter the low-skill base in migrant labour, FT could develop its own programme of attracting highly skilled talent to Scotland. This could involve:

• an inward-entrepreneur programme that is distinct from any UK scheme, to attract individuals and teams to locate new business ventures in Scotland, thus emphasising the higher skilled nature of some migrants. This should include targeting non-Scottish students who are studying at Scottish universities on a permanent or visiting basis. This focus on individual entrepreneurs would complement SDI which focuses on the attraction of businesses.

6.77 And FT could aim to attract independent knowledge workers who set up businesses, often in their home, and who have considerable more flexibility in location than other business sectors (Green et al., 2000; Green, 2004). In conjunction with the Executive's Broadband Strategy (Scottish Executive, 2001) and the wider appeal of Scotland's quality of life, this could involve:

• promoting Scotland's success in home-working and the support provided by the Executive and other partners to assist in independent knowledge workers to create business in Scotland.

Moving beyond students and business: expatriates and returnee Scots

"I think home will always be your home and it will always be like that" (Boyle, 2006).

6.78 As the profile of RAS customers reveals, to date most of the advice provided under FT has been to workers seeking employment and business to recruit overseas and to students. Further, most of the individual initiatives and projects have supported the student target group. In contrast, expatriates have arguably not been central to FT at this stage.

6.79 The growing research into disaporean migrants and populations highlight that for them the above sentiment ensures that, as a target group for FT, they have existing ties with Scotland. FT is, to an extent, knocking on a door which is at least ajar to its messages of Scotland as a place to live, work and study, and is likely to generate a welcoming smile.

6.80 But it is of course a huge challenge to turn that feeling of 'home' into a return migration move. Nevertheless, the snapshot provided by the 2001 Census suggest that each year, many Scots overseas, are returning to Scotland. The Census revealed that 1 in 4 of those migrants coming into Scotland from outside of the UK in the 12 months to the Census were returning Scots - amounting to more than 7,200 people.

6.81 However, there are important issues which need to be recognised in addressing this group of potential migrants.

1. as critics of the term diaspora point out, there is a tendency to view the group as sharing a common tie to Scotland. In reality, diasporeans will have very diverse connections with Scotland - some strongly linked to family and friends, others weak; some based on recent experiences of Scotland, other distant memories and stories; some with positive views of Scotland, other wishing to leave Scotland behind.

2. all have, to varying degrees, become embedded within other communities with different social, cultural and political practices. The very terminology employed here is suspect and value laden: what is 'home' and what is meant by 'return' migration for example.

3. if the diaspora is defined in terms of first generation Scots outside of Scotland, they have all migrated FROM Scotland, whether by choice or need. This group therefore has actively moved away and thus, whilst they have shown themselves to be mobile, they have chosen NOT to locate in Scotland previously.

In each case therefore there are challenges to convince this target group to move again, to retrace their migration pathways and to let go of some of the social capital they have accumulated in their current place of residence.

6.82 The diasporic community can offer a rich source of support and talent which can assist Scotland in its global setting. However, this is not to infer that many are seeking to relocate to Scotland. Some may be encouraged to return but, even if not, they can provide talent to assist the promotion of Scotland globally.

The Scottish diaspora

6.83 Quantifying the Scottish diaspora is very difficult. Not only are there fundamental definitional problems over the nature of the connection with Scotland to qualify as part of the diaspora - familial ties or a sense of belonging for example - there are also few records kept in other countries of the nationality of all but recent migrants. The US and Canadian Censuses identify more than 15 million people in the North American Scots diaspora, but few other countries attempt such measurement.

Diasporic communities and FT

6.84 Those involved with FT have recognised the merit in looking beyond the diaspora as a pool of people to be attracted back to Scotland. The approach to date has three strands:

Strand 1: communicating with the existing diaspora
Strand 2: generating future diasporeans
Strand 3: attracting diasporic returnees (back) to Scotland

6.85 Strand 1: this has involved some reorganisation of the GfoS network and liaising with other networks - including GlobalScot, SNI and, to a more limited degree, university alumni networks. There is also an understandable assumption that members of the diaspora will access information on modern Scotland through the websites, such as scotlandistheplace.com, which are constructed primarily for other purposes. The inclusion on the Sitp website for example of the 'This is Scotland' section is as much aimed to diasporeans as to general surfers.

6.86 Strand 2: a key element of the initiatives addressing international students has been supporting them if they choose to return overseas to act as advocates for Scotland. The emphasis on them having a positive experience - in general life in Scotland as well as education - is an active attempt to generate a future diaspora which is positive to Scotland.

6.87 The underlying rationale for these two strands is a need to alter the sense and image of Scotland held by many outside of the country. In particular, as research for the Executive has revealed in relation to the international image, there is not a perception of Scotland as offering business opportunities and perceptions are often based on traditional and rooted in the past, yet Scotland has many strengths which reflect a modern nation. On the assumption that the diaspora is familiar with at least some aspects of modern Scotland, they become important advocates for instilling a more modern portrayal of Scotland in their current communities.

6.88 Strand 3: this is largely un-developed and to date has not involved any specific initiatives.

Return migration: barriers and hindrances

6.89 But perhaps the biggest barrier here is knowledge. Although it is important to recognise that each migrant's decision to relocate is based on their own unique circumstances, there are a number of more commonplace and shared dimensions which can be understood and addressed. There, however, is a knowledge gap here. To date, there has been a dearth of specific research into the Scots diaspora and which members are considering a return to Scotland. Too little research has examined the experiences of those return migrants to Scotland from the diaspora to understand what factors assist and which hinder there relocation; and, in particular, to what extent their migration decision making differs from non-diasporeans.

6.90 As a result, evidence to date is based upon a few, specific case studies. Condor (2005) offers one such insight into possible reasons why some Scots currently living in England are not returning. This longitudinal research, based on interviews with a sample of 60 people born in Scotland, offers some insights within a UK context. Although this research is cast in terms of a post-Devolution position, the factors raised are not directly connected with the
re-organisation of government. She identified four key factors:

• concerns about English partners or children not being accepted within Scotland
• lack of social capital, networked into relevant professional or occupational culture in Scotland
• non-recognition of professional qualifications or experiences
• having become out of touch with contemporary Scottish culture and political events

6.91 A second case study by Boyle and Motherwell (2005) offers further depth to understanding what barriers members of a Scottish diaspora (in this case in Dublin) construct as reasons for not returning to Scotland. They conclude that the absence of a strong Scottish diasporic community in Dublin and, possibly as a consequence of this, a limited sense in Scottish nationalism meant that the diasporeans were more likely to be attracted back to Scotland through "the superiority of the social quality of life on offer in Scotland" - the cost of living, social service infrastructure, and family networks - and by assisting the smoothness of the migration process (the costs in time and effort to search out information on services and locations). However, even these may not overcome the primary issue for most migrants - economic opportunities. Without hard economic opportunities, extracting Scots diasporeans away from their current life locations will prove difficult.

6.92 In contrast, there is a little more research on the return of other diasporic migrants that could assist FT in reaching out to this group.

6.93 Other research into other diasporean communities may point to shared experiences and opportunities for the development of the third strand of this part of FT. Boyle's (2006) research into the recruitment of Scots to Dublin within the last decade reveals the importance of producer services which assist relocation decision-making. As his research shows, for many participants the recruitment agencies, executive search firms, and recruitment exhibitions all mediated their decision to relocate to Dublin.

Practical action

6.94 It is recommended that attention is given to the research currently being progressed under the Arts and Humanities Research Council's 'Diasporas, migration and identities' programme in order to inform FT about the approaches and methods being used to study and engage with diasporean communities across the world.

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