Europe is facing a demographic time bomb, and it’s threatening to worsen already critical labour shortages. By 2035, there will be about 50 million fewer people of working age in Europe than in 2010.
Meanwhile, global GDP growth for 2023 stands at the lowest annual rate since the 2008 financial crisis, with the exception of the pandemic period, and prices of food and services continue to rise.
As we have seen in the past, the stress of a downturn can have generation-long impacts and, in some cases, hollow out labour forces as those with in-demand skills migrate to more resilient economies. How countries approach these structural challenges will partly determine economic productivity in the years to come.
According to Eurostat, more than 75% of EU companies already struggle to find professionals with the necessary skills to fill jobs, hampering economic growth. Moreover, shortages in sectors vital to the green and digital transition risk attaining common objectives of the EU’s industrial strategy.
The European Commission launched a key report earlier this month looking into what drives the lack of human capital and how to reverse it.
Yet, skills are still a crucial part of the equation. The report strongly highlights the need for skills intelligence, which meaningfully blends quantitative and qualitative information on labour market needs and skills, allowing skills anticipation.
This intelligence should inform targeted migration policy, another of the report’s main recommendations.
