USD 0.93 btc 25537.00
Opinions 13 February 2023

EU embraces digital skills development while European businesses adapt to overcome the low-skilled worker shortage

Tomas Mikalauskas

CEO of RecruitGiant

Last year the President of the European Commission, Ursula von der Leyen, declared that 2023 would be the year of Skills in the European Union, presenting opportunities and programs for businesses.

This emphasis on education, reskilling, and digital proficiency for every citizen is aimed at meeting the objectives outlined in the Digital Decade, which aims to equip 80% of Europeans with essential digital skills and create 20 million ICT specialists by 2030. Business owners can expect a robust investment in upskilling and a strengthened focus on digital literacy.

However, despite the EU's focus on developing digital skills, European business owners continue to need more low-skilled workers and employees in industries with less reliance on technology. RecruitGiant has observed that this imbalance presents a challenge for companies that require a mix of both skilled and unskilled workers to operate effectively. To address this, the EU will likely have to strike a delicate balance between its drive to equip citizens with the skills needed for the digital economy and the need for a diversified and flexible workforce that meets the demands of various industries, for example, food delivery, construction and retail.

The EU's upskilling strategy also aims to attract individuals from third countries with the skills necessary for the EU by enhancing learning opportunities, mobility, and recognition of qualifications. At the same time, member states should facilitate the process for companies to employ third-country nationals.

Several European countries have faced a workforce shortage in recent years, particularly in specific industries. For example, Germany needs more skilled workers in the engineering, information technology, healthcare, and construction sectors. The UK needs workers in several industries, including healthcare, social care, construction, and food and drink manufacturing. Spain has been facing a shortage of workers, mainly in construction, tourism, and healthcare. Italy is short of workers in agriculture, tourism, and healthcare.

It is important to recognise that the workforce shortage is a challenge specific to each country, as immigration issues are addressed nationally within the EU. The COVID-19 pandemic has also had varying impacts on the labour market and industries, with some sectors being more affected than others. Its aftermath continues to be felt in many businesses as large numbers of workers did not migrate back.

Strict measures to control immigration

In 2018, Austria introduced a cap on the number of work permits issued to third-country nationals yearly. This cap is based on a percentage of the total number of unemployed persons in Austria. Nevertheless, last year the Austrian government introduced short-term work permits for foreign workers with short-term contracts in response to the acute labour shortage. This measure is a first in Austria, as companies previously were not allowed to hire foreign workers locally on short contracts. The government has listed nearly 70 high-demand employment areas, but qualified foreigners already in Austria need help to obtain work permits. Despite over 250,000 job vacancies, businesses have requested government support to fill the shortage.

In 2019, Denmark introduced a points-based system for assessing the qualifications and experience of third-country nationals seeking work permits. The system is designed to prioritise highly skilled workers and limit the issuance of work permits to less qualified applicants.

In 2020, Germany introduced a new law limiting the number of work permits issued to third-country nationals each year. The law also prioritises the issuance of work permits to highly skilled workers and those with in-demand qualifications.

In 2021, also the UK government introduced a points-based system for assessing the qualifications and experience of third-country nationals seeking work permits, similar to the system in Denmark, with priority given to highly skilled workers.

Ageing Europe

An ageing workforce is expected to contribute to a shortage of workers in certain countries and industries, as retirees outnumber new workers entering the workforce. According to a UK-based organisation Ageing in Place report, Finland has the third highest percentage of people over 65 among OECD countries, at 22.49%. Italy and Japan have higher rates at 23.37% and 28.79%, respectively.

Overall, we will see a shift towards more targeted recruitment efforts, with employers and governments focusing on recruiting workers with specific skills and qualifications in high demand. This could include rethinking the policies to attract and retain third-country nationals, as well as efforts to upskill and retrain existing workers to fill skills gaps.

In conclusion, the EU and its member states face a difficult challenge in balancing the need for a workforce with concerns about job competition and cultural integration. Hence, a balance must be found between immigration control and the need to fill in the gaps for businesses to survive in the long term. The EU and the member states must implement policies to attract and retain international talent to fill these shortages and respond to the specific needs of the different industries in each country, not only focusing on those highly reliant on digital skills.