The EU's labour-shortage 'time bomb'
Amid Commission predictions that some 5.5 million new jobs will be created in 2007-08, EU leaders are facing a different challenge: finding workers to fill the vacancies.
- Lack of workers
There are now around three million unfilled jobs in Europe, according to Commission figures.
While the problem has traditionally been linked to low-skilled jobs, filling jobs in high-skill sectors, such as engineering, is also becoming increasingly troublesome.
This is particularly true in Europe's largest economy, Germany, where vacancies for engineers rose by nearly 30% over the past year to around 23,000. According to a study by the Institute for the German Economy, the cost of these missing personnel can be estimated at around €3.5 billion per year.
Recently, German engineering conglomerate Siemens AG offered a prize of €3,000 to anyone who can help the company recruit an engineer, as it struggles to deal with an overflowing order book.
The anecdote reveals the severity of Europe's skilled-labour shortage, a problem also common to the information technology sector, which contributes more than 5% of the EU's GDP, but where it is expected that that there will be a shortage of 300,000 qualified staff by 2010.
- Encouraging ‘active ageing’
Firms, which in the lean years had been sending older employees into early retirement, are now finding that their only option is to rehire these 'silver workers' in order to fill their staffing gaps.
With 22% of the EU population already over 60 and this share expected to rise to 36% in 2050, companies will have to rely on senior workers even more in the future and the EU is pushing forward policies aimed at keeping people in the workplace for longer.
Bans on age discrimination, a focus on lifelong training and encouraging more flexible work schedules are part of efforts being undertaken at this level (EurActiv 20/03/07).
- Letting in foreign workers
Getting Europe's workforce to work longer will nevertheless not in isolation be enough to solve Europe's manpower problem.
The EU has recognised the role of labour mobility and migration in overcoming bottlenecks on the labour market, but, so far, European voters have been reluctant to espouse these options, be it through Europe's enlargement, Turkey's membership in the EU or more liberal immigration rules.
Older member states including Germany are still holding back from letting in workers from the ten countries that joined the EU three-and-a-half years ago, despite the drastic shortages of workers in numerous sectors.
However, reports from countries such as Britain, which have opened their doors to workers from the new member states, show that immigration of high-skilled, low-cost workforce from these countries has helped companies to better compete in the global economy (EurActiv 23/11/06).
- Moving abroad
More and more companies are already leaving Europe behind to expand in countries such as China, with lower labour costs and stronger demand. If the supply of engineers does not pick up, this trend could continue, gradually eating away at Europe's 'critical mass' on the world stage.
According to data published on 1 June by the EU's statistical agency Eurostat, the jobless rate in the EU stood at 7.1% in April 2007 – representing nearly a full percentage point drop since last year and bringing unemployment in Europe down to its lowest level for more than 15 years.
In 2006, 2 million new jobs were created and, based on the continent's booming growth rates, the Commission has predicted that another 5.5 million jobs will be created in 2007 and 2008 (EurActiv 08/05/07).
However, amid these positive developments, a dilemma lurks for Europe's businesses and leaders: that of finding people to fill all these new vacancies and keep the economy surging forward.
Europe's declining population, the ageing of its workforce and its lack of qualified personnel mean that labour shortage, which is severely limiting the innovation capacity of those high-tech companies leading the economic revival, is fast becoming one of the largest constraints to the continent's competitiveness.
EU Employment Commissioner Vladimír Špidla believes that free movement of workers can contribute to tackling unemployment and labour shortages in Europe. "It must be recognised that the absence of a mobility culture in Europe has a cost," he said, adding: "Free movement of workers is economically rational and is enshrined in EU treaties. We have not seen any catastrophic tendencies since enlargement." On the contrary, he stresses, imposing restrictions had led to "undesirable side-effects, such as higher levels of undeclared work".
Herbert Buscher, economist at the Halle Institute for Economic Research (IWH) concurs, saying that Germany, has "shot itself in the foot with its restriction to the free movement of workers".
Director of the Association of German Engineers (VDI), Dr Willi Fuchs, says that he does not expect any improvement, given that the number of engineer students is stagnating, and believes that policies should focus on the young generation and schools. "There is an image problem with the engineering profession…Young people still imagine that engineers are people working in blue overalls and spend the whole day in the middle of machines," said Michael Schwartz, spokesman for VDI, adding: "Now, people just want to consume technology."