Could better policy alignment help Europe overcome its labour shortage issues?

Since the start of the year there has been increasing debate on what Europe can do to address its tightening labour market. Per EURES, there are shortages in a number of sectors: manufacturing, healthcare, construction and engineering. In fact, Gi Group Holding addressed the challenges for the manufacturing sector in its recent white paper, Manufacturing: Global HR Trends. Along with commonly-mentioned solutions like higher wages, better employee protections, and investment into continued training through reskilling and upskilling programmes, there is a policy aspect to be addressed. This includes improved regulatory frameworks for education-business alignment, openness to strategic hiring of third-country nationals from outside the EU’s common market, and greater flexibility for usage of agency services.

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Boost dialogue between educators and business leaders

Generally, the issue of interaction between such stakeholders would lie outside the regulatory sphere. However, government policy could play a supporting role here. In its most recent market observer report, Eurofound suggests that policy-makers could have a role in boosting business-academia cooperation by incentivising collaboration between the two. The goal would be for both sides to put forward specific data on where labour shortages are critical and what types of training programmes could support the bridging of skills gaps. If stakeholders like businesses, employment offices, policy-makers (legislators) and educational/training institutions could come together to define skills training priorities, then EU bodies overseeing the distribution of cohesion and structural funds could better target what vocational-educational programmes should receive funding. This is institutional collaboration that needs to take a medium- to long-term view so that educators can begin as soon as possible to boost access to skills learning the market is demanding, e.g. STEM training, AI technologies, machine operations and servicing, software programming and electrical engineering.

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Open up limited-term work visa programmes to third-country nationals

During the past year, we have seen the effectiveness of regulatory flexibility when it came to finding ways to integrate refugees from the conflict in Ukraine into national labour markets in EU member states. Countries like the Czech Republic, Hungary, Poland, Romania and Slovakia have been able to absorb a considerable amount of talent from refugee groups into roles in services, healthcare, and construction. This gives some indication that similar opportunities, even if closely scrutinised and temporary in nature, could benefit EU markets where long-term absences of necessary skills are blocking companies from hiring and thus putting pressure on industry giants to move parts of their operations abroad. In fact, after looking at the experience working to integrate Ukrainian refugees, this would suggest that new trial programmes for more open labour regulations could be launched that extend to include refugees from other parts of the world. This might require more intensive collaboration between governments and business and targeted funding of further upskilling and reskilling programmes, but where there’s a regulatory will, there’s a way. ?

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Explore Agency Employment services to address demographic challenges and coordinate migrant hiring

The current reality across most of Europe is that populations are ageing and this impacts available talent pools across many industries. For example, the healthcare sector has been hit very hard by the rising average age of current physicians. Subsequently, at meeting of Europe’s regional leaders at the WHO, 50 out of 53 countries signed on to the Bucharest Declaration document calling for, among other things, improved health workforce supply mechanisms and improved efforts for recruitment and employee retention in the healthcare sector. This is one example of industry leaders working for better planning of access to qualified labour, but more work needs to be done. This includes greater flexibility in worker hiring and delivery with consideration of wider use of employment agency support for temporary hires where markets are in dire need of talent. Agency programmes can also be used, especially with proper government backing, to help train, move and hire qualified migrant workers to sites where they are most needed. With well-thought-out bilateral programmes, agencies can offer support to migrants arriving on their own or special training structures can be set up in-country to aid migrants prior to their move. It’s all a matter of political will and showing the necessary flexibility to source talent in innovative ways when the moment calls for it.

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It is clear that these efforts will take a lot of testing and learning from project cases about what works and want does not. In any case, continued regulatory rigidity will benefit neither side: not businesses facing talent shortages, nor employees (wherever they may be) seeking jobs opportunities and future skills training.