Analysis of labour and skills shortages: Overcoming bottlenecks to productivity and growth
Introduction
There are currently a number of inter-linked challenges affecting the functioning of labour markets across Europe and which are resulting in significant labour and skills shortages. These include demographic change; high rates of inactivity; and relatively low levels of intra-EU mobility.
Over the last decade, the EU’s working-age population dropped from 269 million in 2012 to 264 million in 2021. In 2022, the number of employed people aged 20-64 years in the EU totalled 193,5 million. The EU working age population is expected to shrink over the next years and decades, with the loss of an additional 35 million people by 2050. Looking further ahead, the EU’s working-age population is projected to decline by 57.4 million until 2100 and the old-age dependency ratio to increase - from 33% to 60% by 2100. As a result of these trends, the EU’s share in the world’s population will continue to fall - from 6% today to below 4% in 2070. Demographic ageing labour market effects, i.e. the combination of growing cohorts of older workers exiting the labour markets with far less young people entering the labour markets is the very challenging overall population equation that the EU is confronted with.
Structural skills mismatches and the insufficient orientation of education and training curriculum relative to labour market needs is a further component leading to shortages of appropriately skilled workers. The European Year of Skills emphasises the importance of improving skills matching, something that can play an important role in helping to address the shortages that all Member States and sectors are experiencing in one way or another.
BusinessEurope has been calling on the European Commission to take more concerted action towards helping to address labour and skills shortages, including through an EU Action Plan as part of the Commission’s 2024 work programme. This action plan should reflect the interplay between different policy areas, combining the need to reduce in-activity rates in Europe and to get people back into work; to foster the timely and effective updating of training curricula relative to labour market needs; and to foster the role of job matching through mobility and migration.
In her State of the Union Speech on 13 September 2023, Commission President von der Leyen highlighted labour and skills shortages as one of the major economic challenges for businesses and the first EU priority to address in the coming year.
As a contribution to the Year of Skills and in framing our proposals for further actions to help address labour and skills shortages, BusinessEurope has undertaken a survey on labour and skills shortages with companies and employers’ organisations across Europe, covering a broad range of sectors.
The findings presented in this study reflect the input received from 110 respondents (93 companies and 17 employers’ organisations) and reflect the views of companies of all sizes, with around a third of responses being from companies employing less than 50 workers. Input to the survey was anonymised.