Advances in healthcare and innovations are buzzwords everywhere and specially in terms of AI. This holds true also in Sweden. According to SKL (Swedish Association of Local Authorities and Regions), just to retain the current service level the healthcare sector needs to add another 530,000 to its workforce before 2025. There are roughly 100,000 people born in Sweden per year meaning more than seven out of ten of all newly graduates from now until 2025 have to choose healthcare as their occupation. To retain the current level of welfare by 2035 requires another 13 SEK per 100 SEK in additional taxes. This development is of course neither realistic nor financially sustainable. To “fix” healthcare according to SKL the efficiency of healthcare needs to be improved. Amen.
In the quest for such efficiency digitalization, e-health and artificial intelligence are technologies often mentioned. Sweden, being a country with a strong reputation in both healthcare and IT, has a “high tail carriage” when it comes to such technologies, i.e. having the demeanor of being a key contender in this area. For companies, such as Lytics, working in these domains there are expectations we will not only help craft the solutions but also compete successfully with such solutions internationally and provide taxable jobs here.
In the next sentence you would expect me to bring up Silicon Valley. And I will. Many regions try to replicate the outstanding entrepreneurship of Silicon Valley and neither Stockholm nor Greater Copenhagen is any different in its aspirations. Greater Copenhagen/Öresund for instance is one of the ten most prosperous regions in Europe and equipped with excellent universities and a work force willing and able. In theory not much should hold us back.
Something however, makes Silicon Valley unique. There is an abundance of capital and the resources necessary to fund ventures based on bold visions. Like a super magnet it attracts high achievers and young professionals worldwide. The called are they who set out to change the world and have fun doing so.
Efforts have gone into analyzing the diversity of Silicon Valley and the opportunities to accept immigrant workers. While there are still ways to go on diversity in Silicon Valley it has come further than the rest of the US. The legal framework for accepting immigrant workers is favorable in comparison to Sweden, which is a key reason why US tech companies suck up a lot of the talent.
Another ace in the deck are the taxation rules facilitating favorable stock option programs. Taxed as capital gains, stock options become an important instrument in recruiting and engaging critical talent. Visionaries are almost per definition less risk averse than the general population and more inclined to postpone some of their current earnings for a potential greater payment later. While money by itself seldom is a good motivator and other factors such as developing exciting technology and making the world a better place rank higher, stock options do create a sense of belonging to the company.
We all need to put food on the table and salary is a proxy for status, albeit a decent salary with stock options ticks the boxes and makes a compelling proposal. It allows tech start-ups to pursue their technology even more aggressively and thus makes the company more attractive. Virtuous cycle created.
Running a tech start-up in Sweden poses challenges in these areas. Work permits by the Swedish Migration Agency include a substantial amount of red tape such as having or mimicking union agreements - often providing foreign nationals with a cost disadvantage to natives.
Not having a union agreement means those terms are, by policy from the union, not official, but still a legal requirement. In effect the bill meant to protect immigrant workers from being taken advantage of impose higher cost and more administration to bring talent in from non-EU countries. This legislation has been widely criticized and the detrimental effects in the tech industry have been documented on national television and newspapers.
This somewhat dated legislation has the origin in here-and-now industries such as construction and berry-picking as a way to safeguard immigrant workers deployed locally are not taken advantage of. This is the official language, but of course there is flip side to the coin. Just as with the job that once paid me an extra 10% per day if I clocked in before 9 am in the morning it all comes down to perspective. The salary minus the 10% extra per day was not competitive and thus the “good time keeping bonus” was indeed a “late arriving penalty”.
Similarly, the language of the legislation reflects perhaps not so much the concern for immigrant workers as ascertaining members of Swedish unions affiliated to the governing party are protected against foreign cheap labor.
The legislation revolving union agreements is so potent a union can summon any company to the negotiation table and demand a union agreement. Should the company decline the union has the legal right to call for a blockade, in effect shutting the business down. So what is wrong with union agreements anyway? Surely if 90 percent of the work force in Sweden is covered by union agreements that draw up the ground rules between the employee and employer and the unions have strong legal rights how bad can they be? And how come start-ups often steers clear of them?
Without a doubt they serve a purpose and are useful in their intended contexts. It is profoundly important to safeguard against human trafficking and undercutting labor costs by taking advantage of foreign work power. Throwing this legislation out would do significant harm. In our context, as a tech start-up the purpose and the use of union agreements are mostly counterproductive. Negotiating a union agreement takes time and puts heavy taxation on the scarce resources of small companies. As Union agreements extend notice periods longer than Swedish Law requires they promote a mutual lock-in function in a dynamic industry. Having long notice periods adds layers of complexity, longer recruitment cycles and slows us down.
Secondly union agreements stem from another era dominated by easily assessed blue-collar vocations where low educated workers were taken advantage of. We operate in the tech field and compete for highly educated and very knowledgeable talent internationally. Our talent base consists of savvy professionals who often prefer individuality and bespoke solutions with little appreciation of being forced into a unionized mould. Start-ups largely compete on flexibility and speed. If we cannot offer generous terms the talent will simply not come here and thus the benefits of this legislation is a moot point for our industry.
Finally, tech entrepreneurs like myself are natural born rebels. We do what we do because we question everything. Sometimes we are nuisance. I once called an orange jam producer and told them they should update their nutrition facts label to take into account the fruit content in their calorie calculations. Today the labels are updated to account for the fruit content too.
Another time I became suspicious of an official statement about a square claimed to be the second largest in Northern Europe. After performing a series of evaluations and comparisons the myth was busted. It turned out even with the most generous criteria of measuring the particular square it would not make it into the top 20 list. Amazingly in Minsk alone there are four squares that are bigger. The city officials caved and changed their story.
So out of a streak of our personality we have a quest for something better (or at least factual) and question everything in society. We take nothing at face value. Most often the questions “what is this good for” or “how could this be done better” are easy to answer and we cannot bring value. This double-edged sword unequivocally carries the essence of the innovative spirit critical to shift paradigms.
I call out the Swedish government to walk the talk. Stop talking about the need for innovation and start working to facilitate it. Please modernize the dated immigrant work visa legislation and make it easier for both talent and the industry. Also, please revise and go further in your work with stock option legislation. The Black & Scholes stock option program is cumbersome and falls under its own weight once companies get a decent valuation. If you rely on us to compete in a global market and craft jobs and provide you with a taxation base we rely on you to give us the same terms as our colleagues in countries such as the US, the UK and Germany.