EESC: Skills mismatch leading to loss of productivity

Written by Martin Banks on 24 July 2018 in News
News

A new report claims that the European economy loses over two per cent of productivity annually due to a mismatch of skills.

According to the study by the European Economic and Social Committee (EESC), this results in a “loss of 80 cents for each hour of work.”

The Brussels-based EESC warns that unless reforms are taken, the situation will get even worse in the future due to demographic trends and ongoing technological developments.

Speaking on Tuesday, an EESC source said the report shows that “change must be implemented by both the authorities at national and local level and stakeholders, including educational institutions, employers and workers themselves.”


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The study says that companies in most 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 professionals, as well as teachers, nurses and midwifes, the impact on the economy is already significant.

There is, adds the report, 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, says the EESC, a body that represents employee and employer organisations at EU level.

Over 70 per cent of companies engaged in professional, scientific or technical services and 67 per cent of ICT companies admitted that skills “mismatches have a serious effect on their human resources policies.”

The companies of five countries surveyed in the study (Austria, Bulgaria, Finland, Germany and Spain) 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. 

In terms of bridging the skills gap, the EESC says that “efficient and more popular” vocational education and training (VET) practices and greater emphasis on lifelong learning and effective labour intermediation are the key.

It says these foster labour market mobility and labour migration and that it is important to “improve skills evaluation in order to help identify in advance the skills to be needed on future labour markets.”

The EESC report goes on to say, “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. 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 EESC’s employers’ group.

 

About the author

Martin Banks is a senior reporter for the Parliament Magazine

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