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The European economy loses over 2% of productivity per year due to a mismatch of skills, according to a recent study commissioned by the European Economic and Social Committee. This means a loss of 80 eurocents for each hour of work. The situation will get even worse in the future due to demographic trends and ongoing technological developments, if no reforms are undertaken.
According to the study, companies in most of the EU's Member States are witnessing a growing shortage of workers with skills tailored to their needs. In some occupations, such as ICT professionals, medical doctors, and science, technology, engineering and mathematics (STEM) professionals, as well as teachers, nurses and midwifes, the impact on the economy is already significant. Moreover, there is also a noticeable shortage of intermediate-level skilled occupations, such as truck drivers, cooks and welders.
The way skills mismatches affect European companies includes additional spending on employee training, loss of competitiveness and innovation capacity and slower recruitment processes. Over 70% of companies engaged in professional, scientific or technical services and 67% of ICT companies admitted that skills mismatches have a serious effect on their human resources policies.
The companies of five reference countries surveyed in the study pointed to insufficient traditions in lifelong learning and (re)qualification as being the most significant factor in skills mismatches. People aged under 24 and over 65 are the most exposed to these mismatches. The least likely to be affected are those aged 40 to 54.
How to bridge the gap?
Efficient and more popular vocational education and training (VET) practices and greater emphasis on lifelong learning and effective labour intermediation are key to bridging the existing skills gap as they foster labour market mobility and labour migration. It is also important to improve skills evaluation in order to help identify in advance the skills to be needed on future labour markets.
Slow or inadequate educational reforms, over-reaching labour market regulations, excessive labour taxation and arbitrary wage-setting mechanisms are policy-related causes of skills mismatches. Therefore, change must be implemented by both the authorities (at national and local level) and stakeholders – educational institutions, employers and workers themselves. Policy measures at both EU and national level are needed to close the skills gap and foster the competitiveness of EU businesses.
The study was prepared by the Institute for Market Economics (IME) at the request of the Employers' Group of the European Economic and Social Committee. The document can be downloaded via the following link: http://europa.eu/!dM96Ft