When a company reaches a certain scale, it is common to see them setting up branches abroad in order to invest in the overseas market or save operational cost. However, these are not the reason for Clio Online, a Danish middle scale IT-based education company, to set up a satellite office overseas. The company open up a second office in Ukraine few years ago not because they wanted to, but because they did not have other choices.
Clio Online, which creates digital materials for schools, is currently the digital learning materials market leader in Denmark. The company provides digital learning materials for 90% of the Danish primary and lower secondary schools.
“We have a problem in hiring high-skilled labour in IT in Denmark,” says Thomas Overholt Hansen, Chief Marketing Officer of Clio Online.
“The problem for us in hiring high skilled labour in Denmark is so big that we have to go out and hire people in Ukraine to “outsource” some of our development,” he says.
In order to sustain the daily operation, the company has 15 to 20 employees sitting in the Ukraine office to share the workload. Even though the employee’s salary is cheaper in Ukraine than in Denmark, Hansen explains the overall cost of having the satellite office is actually higher than hiring local workers. Thus, Hansen would rather hire locally as the synergy will be better if people are working in the same office.
Currently, Clio Online’s expansion plan is being hindered due to the lack of skilled labour. The company also has to scale down some of the projects as there are not enough manpower to finish them.
“This is of course not something that you really enjoy being a company” he stresses.
When asked whether other IT companies are facing a similar problem, Hansen answers that even large companies such as Microsoft and IBM are struggling to find the talents that they need.
“it’s my belief that it (the problem of lacking of high skilled labour in Denmark) has gotten worse. The unemployment rate is lower than before which leads to a harder time to find employees in the sector.”
Denmark has a lack of skilled labour, especially IT specialists, index reveals
Clio Online is not alone in facing difficulty in recruiting skilled labour in Denmark. A recently released index done by the Global recruitment company Hays in cooperation with Oxford Economics proves that Denmark has serious low employment problem, where many vacant jobs, mainly high-skilled job, are unfilled.
The Hays Global Skills Index determines the difficulty for companies to attract and retain the skilled labour they need. The score ranges from 1 to 10. The calculation is based on seven criteria, for instance, talent mismatch, education flexibility and labour market participation. The higher the score is, the harder for the employers of that country to recruit talented workers.
Among the 33 countries in the survey, Denmark scores 6.4, ranking the third in the list. While, Sweden and Luxembourg rank the top two places.
There is a big mismatch between the skills required by the companies and the skills available in the labour market in Denmark, says Morten Andersen, Business Director of Hays Denmark on the index’s website.
In comparison, Hong Kong scores 4.3 this year, ranking 30 in the list. According to index analysis provided by Hays, Hong Kong is currently on the right track and has a positive outlook regarding the economy and labour market. Whereas, Mainland China is doing even better than us, ranking second last among all the countries.
Linda Duncan Wendelboe, the head of Confederation of Danish Industry (Dansk industri, DI) Global Talent confirms that many Danish companies are are having trouble finding employees they need to grow their business.
“That means they might have to say no to orders and put a halt on the expansion plan. So, it is a very unfortunate situation,” she says.
She highlights that IT specialist is what Denmark needed the most at the moment. According to her, Denmark will lack 19,000 IT specialists in the coming years.
“It is not only within the IT industry, basically every company needs IT specialists,” she adds.
Causes behind the severe talent shortage
Wendelboe believes the lack of skilled workers is due to the demographic development of Denmark.
“So basically the older generation is going to retire now but the new generation is not big enough to fill that gap. Many countries in the western world are having the same problem right now,” says Wendelboe.
Lars Andersen, an economist in this field and also as the Managing director of The Economic Council of the Labour Movement (ECLM), thinks education is another main reason for the shortage of skilled labour in Denmark.
“There is a tendency that our education system is becoming more theoretical,” he
explains. The lack of apprenticeships in the labour market, leads to the shortage of some types of skilled labour, such as the mechanics and electricians.
Wendelboe agrees that the education system has not been completely aligned to what the companies need.
“We don’t educate enough IT specialists, even though we are taking in more students to the technical universities. And the technical education is not popular now so the labour market does not have enough young people with skill production or technical education background.” she says.
Solutions: Attract and retain foreign skilled labour
Wendelboe believes that good access scheme is needed if Denmark want to want to help companies to recruit internationally.
Currently in Denmark, a foreign worker has to be offered a job by a Danish employer for no less than DKK 375,000 ($463,039 HKD) a year in order to obtain the working or residence permit under The Pay Limit Scheme. Wendelboe criticises the scheme, which was recently tightened.
Dansk industri suggests the government to lower the pay limit scheme to DKK 325000 ($401,300 HKD), so that it would be easier for companies to hire the competencies they need from outside of Europe.
“if you are coming from a non-EU country as a fresh graduate or skilled production workers, the current Pay Limit Scheme is a very high salary limit to meet,” she says.
Economist Andersen thinks it is important for Denmark to have a better integration policy.
“There are a lot of immigrants who are outside of the labour force right now. Denmark should make these people employable and improve their qualification,” he says.
“it’s not only about attracting and recruiting, it’s also about retaining the talents from abroad. When we succeed in hiring them in the danish companies, we need to make sure that we are good at welcoming them into the danish society so that they would want to stay here.” says Wendelboe.
She points out that that Denmark has to be more aggressive in attracting foreign talented workers as many countries are competing intensely for the best talents.
“We need to brand Denmark as an attractive career destination much more aggressive than we are doing today,” she stresses.
Solutions: Nurture the local talents
Besides from importing skilled workers, both Wendelboe and Andersen suggest that Denmark should invest more on education in order to nurture the local skilled labour. Clio online also believes that as the whole Europe is sharing the same issue, improving education system is the most feasible solution. But how should the Denmark education system be refined to cope with the labour market?
Hansen believes that the education system has to put more effort on making technical education more interesting and easier for young people to grow into.
“We think the problem starts at elementary school,” he says, “We have big subjects in Denmark, such as Danish, English, Mathematics…but we don’t have subjects for students to learn coding, understanding technology and establishing their core digital competences, which is a big mistake.”
The Ministry of Education of Denmark has been finding ways to deal with the problem. Started from this summer, a subject called “Technology understanding” is offered in several selected lower secondary school as an optional subject. The subject is currently a pilot scheme and is not yet compulsory but Hansen hopes that the course will be mandatory soon.
“If this is the case, then we will be able to educate the young people already in an early stage, they can learn early about how technology working and will also lead to more students applying for the technical education when they go further down in the education,” says Hansen.