Skills Gap in Europe – Shortages and mismatch are a major concerns

Skill shortages and skill mismatch are major concerns for policy-makers.

With mass job destruction and sectoral restructuring following the recent economic crisis, four in 10 EU employers had difficulty finding people with the right skills, while unemployment rates peaked. Rapid digitalisation and technological skills obsolescence has also raised concerns about the extent to which the EU workforce is adequately prepared for the fourth industrial revolution. Yet, despite worries of increasing skill shortages and gaps, about 39% of adult EU employees are overskilled and trapped in low quality jobs.

This publication analyses Cedefop’s European skills and jobs survey, a new data set covering about 49 000 EU-28 adult employees. Compiling different data insights, the report highlights that skill mismatch is a complex, multidimensional and dynamic phenomenon. It calls on policy-makers to adopt a different mindset for tackling skill mismatch, focused on sustainable activation, continuous learning, job-task reengineering and promotion of higher-end product market/managerial practices.

Employers having difficulty ‘finding the right skills or talent’ or ‘ filling jobs’ is commonly quoted by policy-makers as the most prominent of skill mismatch types in European job markets; this is sometimes in spite of lack of research evidence to that effect. Some four out of 10 EU firms and global employers report having faced such difficulty. Higher than aver- age recruitment bottlenecks tend to be reported in the manufacturing, ICT and health care sec- tors (European Commission, 2014b), for skilled trades workers and machine operators, sales representatives, engineers and technicians, ICT professionals, workers in marketing posts and drivers and office support staff. For most em- ployers, skill shortages can be attributed to insufficient available job candidates and a lack of both hard or soft skills and work experience.

Careful scrutiny of available data sources that permit analysis of the underlying determinants and reasons for recruitment difficulties tend to present a mixed picture. They often point out that reported employer recruitment di culties are underpinned by various factors that are not solely related to the supply of skills and cannot be reported across the board.

For instance, recruitment difficulties in European enterprises are a natural outcome of mostly private sector firms that are growing in size or of companies experiencing changes in their remuneration and work organisation practices.

The analysis also shows that companies experiencing recruitment difficulties are more likely to adopt responsive human resource management practices, such as offering training to more staff or utilising high-performance work practices, like variable pay and forms of employee empowerment. Nevertheless, it also indicates that firms with difficulty filling jobs have a higher reliance on a temporary workforce and use atypical working hours (working on weekends, shifts, overtime) to meet their skill needs. The staffing profile of enterprises that face talent shortages also tends to rely less on females and older workers.

By contrast, genuine skill shortages, defined as instances where employers cannot fill a job vacancy because job applicants do not possess the required skills even though a competitive job offer is made , arise more in high-innovation and internationally competitive sectors and occupations.

Cedefop analysis of a 2010 Eurobarometer survey capturing employer perceptions of the skills and employability of higher education grad- uates has shown that genuine skill shortages affect about 12% of EU firms that had recently recruited such graduates (Table 4). Depending on different measurements, about 40% to 60% of employer recruitment difficulties cannot be classified as ‘genuine’ under the definition provided above, since the apparent lack of job applicants with the right skills is reported simultaneously with firms’ inability to offer a competitive salary or adopt a competitive recruitment strategy.
It is evident that, in these latter cases, talent shortages cannot be attributed directly to the ineffciency of education and training reforms. The problem lies with the demand side of the market and the need for improvement in firms’ graduate recruitment practices, and their ability to compete more effectively in the recruitment market by improving the profile of jobs on offer. Firms experiencing genuine difficulties in hiring skilled workers are typically competing ininternational markets and operating in the private sector and higher-end product markets, which are naturally dependent on employment of highly competent staff.

Although by its design the Cedefop ESJS focuses on ‘realised labour market matches’, where announced job vacancies by employers were actually filled by those deemed to be suitable applicants, it provides useful additional insight into the adult employees skills match when recruited.

In contrast to widespread concern about rising skill shortages affecting the EU economy in the post-crisis years, the ESJS highlights that recent job finders were more likely to possess the skills required by their jobs at entry, relative to those who began their jobs before the onset of the economic downturn (Figure 15). The prevailing trend in the data is one of recent job finders entering into jobs demanding fewer, rather than more, qualifications and skills than they have. This may be explained by the fact that the composition of the pool of job finders in the post-crisis era was characterised by higher overall skill level, reflecting the marked increase in EU unemployment rates relative to the number of available job vacancies.

Chosen excerpts by Job Market Monitor. Read the whole story at Insights into skill shortages and skill mismatch | Cedefop