Because of structural trends such as an ageing population and an increase in the percentage of students, the EU is facing increasing labour shortages in critical sectors. For instance, in Germany alone, there is a shortage of over 145,000 construction workers (ECSO 2022). Waiting times for insulating wooden frames and installing a heat pump or a solar panel are putting a strain on climate mitigation and the competitiveness of European industry. The need for skills is particularly acute in the care sector and sectors affected by the green and digital transition, such as energy, construction, and industry. This situation has led European Commission President Ursula von der Leyen to declare 2023 as the European Year of Skills in her State of the Union Speech on September 14. What lies behind the initiative, why does it matter, and what could it achieve?
The EU is coping with a growing bottleneck of skilled and manual workers that is hampering our economy and ability to recover from the pandemic and the economic crisis. Climate targets set by the EU for 2030, such as decreasing greenhouse gas emissions by 55%, increasing the share of renewables in the energy mix to 45%, and improving the energy efficiency of buildings by 32.5%, will not be met if Europe lacks the skilled labour force to bring about this transformation. The same goes for EU-wide digital targets such as 80% of the population having basic digital skills, 20 million ICT specialists and 75% of EU companies using Cloud/AI/Big data by 2030. McKinsey foresees that by 2030, 18 million European workers will need to reskill for energy transition purposes and more than 100 million because of automation.
The catalyst for the Commission’s decision to highlight this issue is thus due to both exogenous shocks and path dependency. Political goals such as digitalisation and energy transition add to structural trends such as the ageing population, the increase in student percentage in the overall population and the lack of investment in key sectors.
The energy crisis and the war in Ukraine have accelerated the need for action. The instability caused by the dependency on Russian gas is increasing the impetus to deploy more local energy production. Moreover, a significant share of the 800,000 Ukrainians working in Poland and the Czech Republic returned to their home country after Russia’s invasion in February (Reuters). In April, the Commission urged Member States to adopt measures to recognise the professional qualifications of Ukrainians. In October, it launched the EU Talent Pool pilot initiative to help Ukrainian job-seeking refugees to apply for vacancies. This initiative was, however, criticised by the European Trade Union Confederation (ETUC), which views this as a potential for conflict with unemployed citizens and other job-seeking refugees. The ETUC sees the Talent Pool as a way for the Commission to shy away from addressing the structural issues that caused the labour shortage, such as low-paid jobs and the lack of investment in education.
Reskilling workers is also a matter of just transition. EU-wide, 14 million workers depend on the automotive industry, and over 600,000 jobs are linked directly to the production of conventional engines, yet EVs will only require 300,000 of them (CLEPA 2021). Coal workers also need new jobs, which they will not find without effective reskilling schemes. It is, therefore, crucial to provide opportunities for workers in their current locations and to make these areas attractive for new businesses.
Part of the labour shortage stems from the underrepresentation of women in shortage occupations, such as construction workers, electricians and mechanics, civil engineers and software developers (ELA 2021). Women account for only 32% of the jobs in the renewable industry, and 80% of these are administrative (IRENA 2019). Against this background, the Commission revealed its legislative Proposal for the European Year of Skills on October 12.
The format of the European Year was launched in 1983. It features an issue that the EU institutions have decided to highlight in order to change the behaviours of citizens and institutions towards a chosen matter. Dedicated to youth in 2022, the European Year is a platform for relevant stakeholders to cooperate and raise awareness and for the Member States to kickstart cooperation and coordination (Berenschot 2022). However, as the EU only has a supporting competence in education and vocational training, its power is still limited to funding, coordination and support for national actions. The nationwide implementation is up to the Member States, who are only obliged to appoint a National Coordinator. These will meet regularly with members of the Commission, the Parliament and relevant Agencies.
The main leitmotiv of the Proposal is to move faster on the 12 goals set out in the European Skill Agenda (ESA) presented in 2020. As part of its agenda-setting competence, the Commission released this roadmap in order to strengthen skill development for workers at the EU and national levels. The ESA includes the Pact for Skills, a networking hub of employers, unions, universities and training centres designed to increase upskilling opportunities and share best practices. The Pact is open to organisations in the EU, EFTA (European Free Trade Association - Iceland, Norway, Switzerland and Liechtenstein) and candidate countries and has over 700 signatories representing over 6 million employees. The EU has also recently voted on recommendations on a series of goals from the Agenda; vocational education and training (November 2020), individual learning accounts (June 2022), stimulating learning for the green transition and sustainable development (June 2022), and micro-credentials for lifelong learning and employability (June 2022). Another objective of the Commission is to increase investment in upskilling and lifelong learning and to attract people from third countries by easing mobility and recognising qualifications. The Agenda targets 60% of all adults to participate in yearly training, compared to 37% currently (Eurostat 2020). In just transition areas in Slovakia and Romania, the rate is under 4% (data from 2016, European Commission 2019 p.181). Making 2023 the Year of Skills should also help redirect money to the skills agenda from EU funds. These include the European Social Fund Plus (€99 billion), which aims at helping people find a job, InvestEU (€3.6 billion), which aims at raising funds for investments inter alia with its Social Investment and Skills window, and Erasmus Plus (€26.2 billion), the EU’s Programme for education, training, and youth.
It is also a way for the Commission to build political impetus for its legislative priorities. Having acknowledged that the EU’s inflexible labour migration system does not compete with Australia’s, Canada’s or the US’s pull factor for skilled migration (Euractiv 2022), the Commission proposed revising the Single Permit Directive and the Long-Term Residents Directive. The aim is to ease legal migration to the EU by suggesting a series of measures to improve migration management, cooperation with third countries, and the cumulation of residence periods in multiple Member States for residence status. The Commission also wants to move forward on the EU Talent Pool and Talent Partnerships. The Talent Pool is an online platform to resolve skills mismatches between potential migrants and EU-based employers. A pilot initiative was launched for Ukrainian citizens in October. So-called Talent Partnerships are mobility schemes for work and training between the EU and neighbouring countries based on the positive results from the Migration Partnership Facility, launched in 2016. Belgium launched a pilot project with Morocco to offer 120 Moroccan nationals ICT, soft skills, and English classes; 9,677 people applied, illustrating the great potential of this kind of project but also the severe situation there. The first Partnerships will be concluded with Tunisia, Egypt and Morocco.
Despite the improvements, stakeholders and socio-democratic partners are highlighting the unaddressed challenges. First, trade unions have pointed out that quality jobs, democracy at the workplace and working conditions are not mentioned once. For the ETUC, if the European Year of Skills does not account for retention strategies and working conditions, it will put the burden on workers, not companies. The Commission’s focus on activating inactive populations (referred to as NEET: Not in Education, Employment or Training) and their inclusion in the labour market to fix system failures is a key example of shifting attention from the structural to the individual (Haikkola 2018, ETUC 2022).
To bring on board workers and unions on the skills agenda, they need to be assured that they will have a say (ETUC). As highlighted by a study commissioned by the European Parliament’s Committee on Culture and Education, employee involvement, more social dialogue and inclusion at the workplace are positively linked to skill development, well-being at the workplace and company performance. Workers are the most knowledgeable about their skill needs. One of the study’s recommendations is to provide more direct funding and support to social partners for the success of the twin transition. The “Great Reshuffle” induced by the pandemic has given unions and workers more leverage for negotiating better working conditions, and unions do not plan to lose ground on the matter.
The Commission is also not addressing the risk of increasing gaps between Northern EU countries attracting skilled workers from Southern and Eastern states. In addition, the ETUC is warning that bringing non-EU workers will aggravate the brain drain while ignoring the potential of the 13 million currently unemployed in the EU. Another aspect that deserves more attention is the interconnections between national labour markets. As intra-state mobility is high in the US, it is easier to resolve skills matches than in the EU when some states have surpluses or vacancies. Germany, for instance, lacks electrical and motor mechanics, whereas Austria has too many; the same goes for the Czech Republic, which lacks bricklayers, toolmakers, cooks and truck drivers, whereas Slovakia has too many (ELA 2021).
Unions and training centres would have welcomed new funds and instruments for the skills agenda instead of a simple commitment to “create synergies” and “play a key part” for existing agencies and funds.
On the bright side, the Commission has taken into account the inclusion imperative and the special needs of disabled people, women and young workers within the Skill Agenda. With over 6 million workers, the Pact for Skills serves as a great impetus for better EU-wide cooperation. Other encouraging aspects are the focus on green and digital skills and the willingness to address the labour shortage at the EU level.
The European Parliament will now give the Proposal its first reading, which will then go to the Council, with the European Economic and Social Committee (EESC) and the Committee of the Regions (CoR) issuing opinions. The EP is to nominate a Rapporteur in the upcoming weeks. The process should be relatively swift, with the final adoption of the European Year of Skills completed by December 2022.
The labour shortage is a pressing issue that the Commission has begun to address in recent years. The Skills Agenda launched in 2020 was an important start for stakeholders to gather and discuss challenges and solutions, such as better recognition of skills, support for green and digital skills, and more cooperation. However, the Commission fails to consider structural aspects, such as working conditions, wages, the attractiveness of vocational education or the digital gap. In addition, it could provide a better legal framework for reskilling as well as direct structural funds more effectively toward upskilling. The Skills Agenda touches upon various policy fields, from education to labour markets and migration. As such, it is also likely to be politicised more heavily, hopefully bringing the attention and investment the topic urgently needs. If we do not implement the solutions immediately, the EU risks being blindsided by economic competitors and failing at its own targets.
Julian Parodi is Research Assistant at FES Just Climate. He graduated from Sciences Po and Freie Universität Berlin in Political Science and Government Studies. Previously, he worked as Intern for the Robert Schuman Foundation in Brussels.