Harnessing talent in shrinking cities

Demographic trends of last decades, notably ageing and declining birth rates not compensated by inward migration, are reshaping European Union’s growth and territorial development prospects. While all EU regions experience a shrinking of their working age population, many are more acutely concerned.

In the Communication ‘Harnessing talent in Europe’s regions’ published on 17 January 2023, the European Commission identifies 82 regions in 16 Member states, accounting for almost 30% of the EU population, most severely impacted by this decline of the working age population, combined with low and stagnant share of tertiary education graduates, or by a net out-migration of their 15-39 age population.

These regions are in, or risk falling into, a talent development trap that could deepen their specific structural challenges (e.g. inefficiencies in the labour market, limited economic diversification or over-reliance on declining sectors, low performance on innovation reducing the demand for highly skilled workers, poorer social outcomes and a more restricted access to essential services) and seriously hamper their sustainable growth and attractiveness potential. If left unaddressed, this process will trigger new and growing territorial disparities, and the feeling of inhabitants and communities from these regions, of being left behind.

As the Communication highlights, tackling these challenges will require the mobilisation of a wide range of existing EU instruments and policies to support the economic revitalisation and development of the right skills to attract high-potential activities and a dedicated talent booster mechanism has been set up. Cohesion policy will be naturally at the forefront of these coordinated efforts by helping regions to enhance their attractiveness for talents, by diversifying their economies, upgrade accessibility to services, boosting the efficiency of public administrations and ensuring the involvement of local and regional authorities through dedicated local strategies.

In this context, the European Urban Initiative (EUI) is enlisted as part of the talent booster mechanism through this new call for proposals on innovative actions to support cities particularly in the above-mentioned regions, to test new solutions to retain and attract talent. The call is seeking to identify placed-based and integrated pilot projects, i.e. involving local communities in experimentations at the urban scale and addressing the economic, social and environmental dimensions of the faced demographic challenges, in a way that could inspire the use of Cohesion policy programmes in these urban areas. In particular, knowledge capitalisation and transfer as well as the replication and/or upscale of most successful experiences with European Regional Development Fund (ERDF) investments under the specific objectives listed in the ‘Cohesion policy targets’ (see section below) can, thus contribute to the more systematic revitalisation process in the longer term. 

The European Commission aims at reaching a balanced portfolio of projects meeting the highest quality standards while reflecting the geographical, spatial and demographic diversities of European cities.

Whether or not pertaining to regions that are in, or risk falling into, a talent development trap, cities faced by a rapid shrinking of the working age population and failing to attract and/or retain younger and/or more qualified residents, are confronted to a direct threat of shrinking, with emigration of their skilled labour force and skills and labour shortages hampering their competitiveness. Factors such as the ageing of the remaining population, the relative increase in the ratio of workers to dependents, as well as proportion of less skilled and low-income groups that  is often associated with shrinking, can have mutually reinforcing effects.

The deficit of skilled workers constitutes a brake to economic diversification and/or the settlement of more competitive industries. It also translates into lower fiscal revenues for city administrations and greater per capita costs to maintain local services and infrastructure which the ‘captive’ population is in crucial need of. On the longer term, the quality of public spaces, service levels of well-being facilities, such as education, employment, public transports or health, may suffer. The whole urban environment can also deteriorate from the decline of economic prosperity (e.g. closure of former commercial or industrial production sites turning into brownfields), distilling overall a negative image of the city, leading to even more people and businesses moving out[1].   

Capital cities, bigger agglomerations and/or regional centres, because they host a concentration of economic activities and associated job opportunities and services[2], are less likely to be exposed to these threats than small and medium size cities[3]. Furthermore, while capital cities and bigger agglomerations may have more capacity to incorporate cutting-edge innovation in their approaches, including new solutions never tested before in the EU, innovation is important for cities of all sizes. It will be thus paramount for applicants to demonstrate that their city is affected by the combination of demographic challenges and difficulties to attract, retain or develop the talents, skills and qualifications needed to mitigate this impact, as referred to in the Communication on Harnessing Talent in Europe’s Regions whether or not pertaining to the listed NUTS-2 regions[4].

Shrinking small and medium size cities are particularly encouraged to apply as these hold a great potential to boost the attractiveness of surrounding predominantly rural regions, facing a talent development deficit. Individually or as a grouping, in partnership with socio-economic partners (universities, research facilities, vocational training institutions, companies and small business clusters), such cities can display a number of functions to stimulate the participation of prime-aged people into the local workforce and attract new residents, better connecting urban and rural areas in terms of supply of services and amenities and thus contribute to improve the quality of life and the rejuvenation of surrounding territories.  

With proper strategies and combined innovative approaches, some of the above-mentioned  issues can also be turned into opportunities. As population decreases, the housing supply may exceed demand, leading to an increase in vacant properties and a decrease in property value that can be appealing to investors and/or attract younger people and families looking for more affordable housing and a better environmental quality in comparison to urban centres.

Brownfields can be transformed into housing and/or green areas, abandoned buildings into co-working spaces, muti-purposes functions, kindergartens, theatres, etc., reducing urban sprawl and transport distances. The availability of new means of communication, such as high-speed internet, combined with less congestion may also attract online businesses and/or nomad workers. These cities could also be more prompt to testing novel approaches and new social experiments, like regrouping the population to densify specific areas (to comply with ‘compact city’ model) or involving citizens in related decision-making and/or in the co-design and/or coproduction of services most needed to attract or retain talents.

Boosting the demand for younger and qualified talent in cities including by:

• Encouraging the economic diversification of targeted urban areas, by focusing on emerging sectors with greater added value but also potential in view of local economy’s characteristics, possibly in the light of entrepreneurial discovery processes and smart specialisation approaches;
• Reinforcing local entrepreneurship of young people through innovative financial schemes supporting the creation of start-ups or spin-offs by resident students and/or recently graduated workers (and in particular women), related incubation, mentorship and associated business services.

Boosting the supply of young and qualified talent and attractiveness of cities, including by:

• Fostering new alliances between urban authorities, enterprises, academia, research institutions and/or vocational training centres inter alia to:
  • develop curricula, scholarships, on-the-job trainings and associated financial assistance such as youth guarantees in the view of bridging skills mismatches between business demand and available labour forces, as well as in view of the mastering of competences associated to the green and digital transitions;
  • encourage women (equal access to) qualifications and employment;
  • promote and organise the integration of EU and non-EU high-skill workers.
• Developing services favouring labour force participation and the quality of life of inhabitants, including through community-based projects increasing social capital and adapting the offer of services to local needs (retirees, families), initiatives contributing to rejuvenate public spaces, the associative, cultural and/or creative community life and/or promoting gender balance and inter-generational solidarities;
• Enhancing the access to affordable housing and/or facilitating the settlement and/or resettlement of young workers and their families and/or of researchers and/or post-graduates that may be indispensable to sustain a vivid innovation ecosystem;
• Renewing and/or rightsizing the built environment and urban space as well as public infrastructure and associated services through:
  • measures to renovate and/or repurpose vacant housing, historical or industrial buildings, or to reconvert brownfields and similar abandoned sites into green spaces, also contributing to the EU Green Deal targets towards carbon neutrality;
  • new governance and financial models, mutualisation of means within functional area dynamics, to better connect urban and rural areas and/or run collectively infrastructures and services better calibrated, at the appropriate critical mass of population and benefiting from economies of scale, for the cities and their surrounding territories;
  • measures to modernise and to improve the quality of the public administrations, of basic services offered to the population as well as to improve the transparent and participative involvement of citizens in decision-making.

• Specific objective 1.1 for a more competitive and smarter Europe by “developing and enhancing research and innovation capacities and the update of advanced technologies”,
• Specific objective 1.2 for a more competitive and smarter Europe by “reaping the benefits of digitalisation to citizens, companies, research organisations and public authorities”;
• Specific objective 1.3 for a more competitive and smarter Europe by “enhancing sustainable growth and competitiveness of SMEs and job creation in SMEs, including by productive investments”;
• Specific objective 1.4 for a more competitive and smarter Europe by “developing skills for smart specialisation, industrial transition and entrepreneurship”;
• Specific objective 4.1 for a more social and inclusive Europe by “enhancing the effectiveness and inclusiveness of labour markets and access to quality employment through developing social infrastructure and promoting social economy”;
• Specific objective 4.2 for a more social and inclusive Europe by ‘improving equal access to inclusive and quality services in education, training and lifelong learning through developing accessible infrastructure, including by fostering resilience for distance and on-line education and training’;
• Specific objective 4.3 for a more social and inclusive Europe by ‘promoting the socioeconomic inclusion of marginalised communities, low income households and disadvantaged groups, including people with special needs, through integrated actions, including housing and social services’;
• Specific objective 4.4 for a more social and inclusive Europe by ‘promoting the socio-economic integration of third country nationals, including migrants through integrated actions, including housing and social services;
• Specific objective 5.1 for a Europe closer to citizens by “fostering the integrated and inclusive social, economic and environmental development, culture, natural heritage, sustainable tourism and security in urban areas”.

Project proposals will be assessed, among other criteria, on their ability to achieve credible results and on the soundness of their methodology to measure these results.

In their applications, urban authorities may refer to any of the indicators listed below, whenever relevant for their project ideas. The list is not prescriptive or exhaustive. It includes indicators that do not correlate explicitly with the subject matter of the call on harnessing talent in shrinking cities but which can be of help to express tangible results and are thus worth considering. Such indicators should be complemented by indicators relevant to the specific project.

Urban authorities remain free to define their own project specific indicators, while considering those listed, in order to reflect in the clearest and most convincing way the changes, which their project has the potential to accomplish. 

Output indicators

• New products and services created (measurement unit: new products/services);
• Infrastructure supported (new, renovated, reconverted or modernised) (measurement unit: supported infrastructures);
• New equipment created and/or supported (measurement unit: new equipment);
• People supported (trained, upskilled, accompanied or assisted) (measurement unit: persons);
• Enterprises supported (of which: micro, small, medium, large) (measurement unit: enterprises);
• New enterprises supported (measurement unit: new enterprises);
• Enterprises cooperating with research organisations (measurement unit: enterprises working with research organisations);
• Capacity of new or modernised social housing (measurement unit: persons);
• Stakeholders involved in the preparation and co-implementation of the project (measurement unit: participations of stakeholders);
• Citizens involved in the preparation and co-implementation of the project (measurement unit: persons).

Result indicators

•  
• Jobs created in supported entities (measurement unit: annual FTEs);
• Users of new and upgraded digital services, products and processes (measurement unit: users/year);
• New enterprises surviving in the market (measurement unit: enterprises);
• SMEs introducing product, process, marketing or organisational innovation (measurement unit: enterprises);
• Trademark and design applications (measurement unit: trademark and design applications);
• Apprenticeships supported in SMEs (measurement unit: persons);
• SMEs staff completing training for skills for smart specialisation, for industrial transition and entrepreneurship (by type of skill: technical, management, entrepreneurship, green, other) (measurement unit: participants);
• Annual users of new or modernised facilities for employment service (measurement unit: users/year);
• Annual users of new or modernised childcare facilities (measurement unit: users/year);
• Annual users of new or modernised education facilities (measurement unit: users/year);
• Annual users of modernised and/or buildings reconverted in social housing (measurement unit: users/year);
• Annual users of new or modernised temporary reception facilities ((measurement unit: users/year);
• Annual users of new or modernised health and/or social care facilities ((measurement unit: users/year);
• Level of participation achieved in the engagement with local communities (information, consultation, co-creation, co-decision) (measurement unit: percentage of the local population engaged).