According to a study published by the European Economic and Social Committee (EESC) on 24 July 2018, EU businesses are losing millions of euros due to skills mismatches in the European labour market.

The problem

In brief, skills mismatches mean that business are not able to find new employees In possession of the necessary skills to completely fulfill their job requirements. It can also mean that new employees are overqualified for the duties they are assigned. In both cases there is a problem of “mismatch” between the supply and the demand of skills in the job market. Skills mismatches are bad for economy because they make businesses less competitive and have social repercussions on affected employees. More precisely:

  1. they obstacle productivity of businesses as they don’t find the profiles fitting 100% their projects. The EESC study estimates that European economy loses over 2.14% productivity per year due to skills mismatches;
  2. they can extend job seekers’ unemployment, which is particularly worrying in those EU countries that are still affected by high levels of long-term unemployment and struggling to put they economies back on track after the economic and financial crisis (according to Eurostat, in 2017 the EU unemployment rate was 7.6%, with regional peaks of up to 29.1%);
  3. they can reduce innovation potential of businesses not finding properly skilled human resources, which is another source of worry for EU competitiveness, as the European Innovation Scoreboard 2017 ranks the EU only 6th after South Korea, Canada, Australia, Japan and the US and up only a slight 2% since 2010 (cf. p 13 of the study).

The causes

What are the causes of skills mismatches? According to the authors of the study, there are mainly two factors: (1) educations systems are slow to adapt to the ever-evolving needs of the economy and keep up with the development of new technologies and business models; (2) low labour mobility across regions and sectors. The second point specifically is in turn caused by a set of flaws in the EU labour market such as information asymmetries between countries (job seekers are not easily aware of the conditions to access positions in other countries), insufficient recognition of foreign qualifications (such as university diplomas) and lagging cross-country labour intermediation (despite the EURES network expansion). Cultural and linguistic differences can also be counted in the problems leading to low labour mobility.

Addressing low cross-country mobility

To be really competitive, fair and to grow constantly, the European economy cannot waste human capital. It needs to make full use of the integrated labour market, where people have the right and the concrete possibility to move to another country and be employed where its skills and interests best match labour demand. Unblocking cross-country mobility of talents should be a priority in a barrier-free Europe. In particular:

  1. Invest in the Erasmus Generation! The ErasmusPlus is the most successful programme of the European Union and should be allowed to empower even more citizens in the coming years. Funding growing talents to make experiences abroad is the most direct way the EU has to address the mobility problems pointed out here above. As European leaders are discussing the next seven-year budget of the European Union, the Erasmusx10 campaign has some suggestions for them to take ErasmusPlus to the next level.
  2. Automatic recognition of higher education diplomas would make it much easier for students and young job seekers to move their search across countries and potentially find a job quicker. The upcoming set up of a “European Education Area” would be the right framework to automatise qualifications’ recognition.

Is garagErasmus doing anything to counter this phenomenon?

Of course! New editions of the garagErasmus international Talents Match are planned in the fall 2018. Know more about what it is and follow our social media channels and website to be the first to know where the next ones will take place!