Employment and Social Developments in Europe 2023

In the light of the importance of skills for the EU economy and the European Year of Skills, the 2023 annual Employment and Social Developments in Europe (ESDE) review, entitled “Addressing labour shortages and skills gaps in the EU”, provides evidence on persistent labour shortages and changing skills needs in the EU. The report considers the implications of skills demands in the context of the green and digital transitions. It highlights certain labour market participation challenges, including demographic changes (notably ageing) and lower labour market participation among certain population groups, with a particular focus on women and migrant workers born outside the EU.

The analysis shows that labour shortages are found in a diverse range of occupations across all skill levels: construction, healthcare, science, ICT, engineering and mathematics (STEM). The importance of the structural drivers, underlying shortages, vary by occupation and sector. Overall, the working conditions or human resource management (HRM) practices are more often linked to employers’ difficulties in finding people, rather than a lack of skills among job applicants. Still, a limited supply of skilled workers poses challenges in certain fields (e.g. STEM, healthcare).

The report highlights the importance of policies and reform measures to alleviate persistent labour shortages. Those include investing in training and adult learning, increasing financial incentives to work, alleviating the barriers to people entering the labour market, improving work and pay conditions and social protection coverage, and implementing policies to attract workers from abroad into jobs facing shortages.