JANUARY 16 2020
- With its strong start up culture, Stockholm could become the smartest city in the world, but it requires reform
- Nordic region will become an even more interesting area for investment according to research sponsored by Nordic Capital
Sweden comes in second place in terms of the concentration of knowledge-intensive jobs in Europe, retaining its position from last year and continuing to be a leading European knowledge nation. This finding comes from a new report The Geography of Europe's Brain Business Jobs: 2020 Index from the European Institute for Policy Reform and Entrepreneurship (ECEPR), which is produced with the support of Nordic Capital.
The report identifies the presence of so-called "brain businesses", which are companies that compete through their brain power and specialist expertise. Author Nima Sanandaji, CEO of ECEPR, has conducted an extensive study, mapping 31 countries and 278 regions in Europe based on how many brain business jobs exist per 1,000 people of working-age.
The report, published for the third consecutive year, shows that Sweden continues to be a leading European knowledge nation. No other country in the EU has such a high concentration of knowledge-intensive workers as Sweden and if the current trend continues, Sweden is set to become the most knowledge-intensive country in Europe as a whole. This year, Sweden increased its share of advanced jobs to 102 per 1,000 people of working-age – just behind Switzerland which tops the European list with 106.
There are many indications that Sweden could soon become the country in Europe with the highest proportion of people of working-age with a knowledge-intensive job. While Sweden’s concentration of knowledge intensive workers is increasing rapidly, there are signs that Switzerland is stagnating.
One explanation, provided by the report, is that economic liberalisation and strategic tax reform, including the participation exemption rules in 2002 and the abolishment of inheritance and wealth taxation in 2004 and 2007, have fostered a start-up culture that has made Stockholm a Nordic miniature of Silicon Valley.
Breadth and depth is another explanation for the Swedish tailwind, according to Nima Sanandaji: “Sweden in general, and Stockholm in particular, is distinguished by having strengths in all the relevant business areas. Switzerland is solely relying on high tech-production and when that industry is performing badly, the whole country falls behind.”
In terms of the broader Nordic region. Denmark is ranked as number three by the report and Finland at number ten. Norway is experiencing a modest increase but at a much lower rate than Sweden and is ranked at number twelve this year.
Mapping businesses that require extra knowledge sends important signals about the shape of a country’s economy. These knowledge-intensive jobs contribute tremendously both when it comes to income and productivity growth. The report also provides answers as to where in Europe you should establish your business if you want to take advantage of a region where highly qualified jobs are common.
Although a country may be ranked low, large variations found within the same country. This is particularly true in Central and Eastern Europe, where Bratislava in Slovakia and Prague in the Czech Republic are ranked at number one and four, respectively, out of all 278 regions included in the study. As a city, Stockholm is only surpassed by Bratislava and the Oxford region, a region which can partly attribute its high ranking due to the strength of Oxford University.
The report is produced by ECEPR with the support of private equity firm Nordic Capital.
“As an active investor in Europe, with a focus on the Nordic region, Nordic Capital believes it is important to constantly increase our understanding of the business environment, its preconditions and what attracts investment to our region. This is the reason we have chosen to support research within this field”, says Kristoffer Melinder, Managing Partner, Nordic Capital Advisors. The report confirms Nordic Capital’s analysis of the Nordic markets, particularly the Swedish market. Sweden stands up well against international competition, and through further reforms, the Nordic region will become an even more interesting area for investments”, Kristoffer Melinder continues.
The goal of the politicians in Sweden’s capital Stockholm, is to make Stockholm the world's smartest city by 2040, a goal which requires the creation of a successful hotbed for more knowledge-intensive jobs. However, the road is paved with challenges. Stockholm suffers from a lack of skilled workers and housing problems which make it difficult for companies to recruit.
"All regions aspire to become a hotbed for innovation and creativity but only a few succeed," adds Nima Sanandaji. “Significant concerns include high housing prices and high taxes which push up the cost of hiring programmers, engineers and other skilled workers in Sweden. The competition is fierce from the Central and Eastern European countries where many young people are educated with skills that are high in demand and where the wages are considerably more competitive in comparison to Sweden.”
The level of highly qualified jobs increases in those regions and countries where knowledge-intensive companies see the greatest possibility for development and growth. It is in these places where engineers, programmers, designers and other innovative specialists congregate. This in turn leads to better chances for start-ups to succeed – and at the same time the chances of technological advancement are greater. The cost of skilled labour combined with expert knowledge provides an important competitive advantage.
These and other questions will be discussed at a seminar on Thursday, January 16, hosted by the Stockholm Chamber of Commerce. The author of the report, Nima Sanandaji, will participate, as well as the former Prime Minister, Fredrik Reinfeldt, the CEO of Intrum, Mikael Ericson, Sara Klingenborg, Head of Recruitment at AFRY Digital Consulting, and Klas Tikkanen, COO, Nordic Capital Advisors.
Ranking of 31 countries - The Europe’s Brain Business Jobs 2019 Index
To access the whole list and the full study see: www.ecepr.org.
Katarina Janerud, Communications Manager
Nordic Capital Advisors
Tel: +46 8 440 50 50
About Nordic Capital
Nordic Capital is a leading private equity investor with a resolute commitment to creating stronger, sustainable businesses through operational improvement and transformative growth. Nordic Capital focuses on selected regions and sectors where it has deep experience and a long history. Core sectors are Healthcare, Technology & Payments, Financial Services and in addition, Industrial & Business Services and Consumer. Key regions are Northern Europe and globally for Healthcare. Since inception in 1989, Nordic Capital has invested more than EUR 14 billion in over 105 investments. The Nordic Capital vehicles are based in Jersey. They are advised by several non-discretionary sub-advisory entities based in Sweden, Denmark, Finland, Norway, Germany, the UK and the US, any or all of which are referred to as Nordic Capital Advisors. For further information about Nordic Capital, please visit www.nordiccapital.com