Politics and Analysis

Labour shortages – a growing challenge facing employers in Europe

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EU Member States have experienced an increase in employment of 13 million people since 2013. In the same period, unemployment has fallen by approx. 9 million people. The current recruitment situation in Europe at the beginning of 2019 is more critical than immediately prior to the financial crisis in 2008 when the European labour market was overheating. This means that employers in a number of EU Member States are experiencing problems in recruiting qualified staff. EU Member States are therefore facing a significant challenge that may risk obstructing growth and employment in the coming years.

In order to tackle the challenge of recruiting qualified staff, the Confederation of Danish Employers has set out the following recommendations for initiatives to be implemented in EU Member States:

Deferred retirement age

In recent years, a number of EU Member States have experienced a significant fall in unemployment rates that are now lower than the EU average. Labour resources in these countries are therefore limited, cf. Figure 1.

The Confederation of Danish Employers recommends that EU Member States address their limited labour resources by introducing reforms to defer the retirement age. This will give employers the possibility to retain their employees longer.

EU Member States should also ensure that their education systems are geared continually to educate the workforce in order to make qualifications match the requirements of the labour market.

The European Commission should encourage EU Member States to ensure that the required reforms of the labour markets and educational systems are put in place. This can be done through the European Semester and the country-specific recommendations.

Inactive groups should participate in the labour market

In its Europe 2020 strategy, the European Commission recommends an employment target of 75 percent of 20- to 64-year-olds. The comparison of employment rates for men and women in all EU Member States generally shows a lower employment rate for women than for men.

This testifies to the fact that there is a great potential to increase the labour force across Europe. If the target of the European Commission’s Europe 2020 strategy is met, about 15 million additional women would enter the European labour market.

The Confederation of Danish Employers recommends EU Member States to encourage women to participate in the labour market. This could contribute significantly to increasing the size of the European workforce.

To support this development, the European Commission should use the European Semester and the country-specific recommendations to encourage EU Member States to implement reforms that can help inactive groups currently outside the labour market to enter it.

Increased mobility

Despite the fact that the EU has focused on promoting the free movement of labour for many years, the actual mobility of labour between the EU member states continues remains low.

Only 1 percent of employed 20- to 34-year-old EU citizens have moved to another country for their current job. Among unemployed 20- to 34-year-olds, only 12 percent would move to another EU Member State to work, cf. Figure 2.

Although several EU Member States in southern Europe have a relatively high level of unemployment, EURES, the European job portal, contains only approx. 5,000 résumés from Southern Europeans indicating that they wish to work in Denmark, a country experiencing widespread labour shortages, is low.

The Confederation of Danish Employers recommends that a more effective EURES system should be set up. The system should be better at supporting and increasing the mobility of workers between the EU Member States and thereby helping to even out the differences between employment rates across the EU.