The skill gap in the European Union remains high across all sectors and is an enduring difficulty faced by businesses and employees. According to the Open University, the impact of this is employee “overwork, diminished productivity, and compromised wellbeing.” And that doesn’t cover the impact on businesses and the wider economy.
In this article, we will be looking at the labour shortage and outlook from key industries, assessing their impact on the economy and what can be done to counteract this.
In this article, we will be looking at the labour shortage and outlook from key industries, assessing their impact on the economy and what can be done to counteract this.
What is labour shortage?
Labour shortage is a term used to describe when there are more jobs available on the market than qualified workers to fill them.
In other words, businesses are struggling to find the right people with the right qualifications to fill their job specifications.
At the time of writing, the job vacancy rate in the EU is 2.3%. However, many of these vacancies require highly skilled workers to fill them.
Even though there are currently 10.819 million unemployed people in the EU, not all of them have the right qualifications to fill these vacancies.
This results in a labour shortage impacting, not only the individuals searching for work, but also the businesses desperate for workers.
In other words, businesses are struggling to find the right people with the right qualifications to fill their job specifications.
At the time of writing, the job vacancy rate in the EU is 2.3%. However, many of these vacancies require highly skilled workers to fill them.
Even though there are currently 10.819 million unemployed people in the EU, not all of them have the right qualifications to fill these vacancies.
This results in a labour shortage impacting, not only the individuals searching for work, but also the businesses desperate for workers.
Labour shortages by industry
The labour shortage across the EU has been growing steadily over the last few years, causing far-reaching implications across various sectors and the wider economy.
While labour shortages are common, some industries have been particularly hard hit, including:
While labour shortages are common, some industries have been particularly hard hit, including:
Human Health and Social Work (144,000 vacancies)
Hospitality (3.6 vacancies per 100 workers)
Construction (2.5 vacancies per 100 jobs)
Wholesale and Retail (103,000 shortfall of workers)
Who does the EU labour shortage affect?
The labour shortage affects every area of the economy, from individuals’ lives and the businesses they work for to the growth of the EU’s economy over time. Here’s a closer look at the effect of the labour shortage on people and what needs to change:
Businesses
62% of organisations are facing skills shortages. Skills shortages have been a common problem for businesses over the last few years, steadily growing over time due to the after-effects of the COVID-19 pandemic and the cost of living crisis (to name a few).
What’s more, due to the ageing population, businesses are seeing many of their most highly skilled employees retiring, leaving significant skill gaps that workers are not always qualified to fill.
When businesses can’t hire individuals with the skills they require, they are unable to grow their business further. This results in stagnation and, sometimes, even business failure.
What’s more, due to the ageing population, businesses are seeing many of their most highly skilled employees retiring, leaving significant skill gaps that workers are not always qualified to fill.
When businesses can’t hire individuals with the skills they require, they are unable to grow their business further. This results in stagnation and, sometimes, even business failure.
Employees
When employers can’t find qualified individuals to join the workforce, the pressure to fill the gap is placed on existing employees. 68% of organisations report that skills shortages have increased the workload of existing staff.
As a result, existing employees are expected to work harder for longer, with some being promoted to positions they’re not qualified for just so the company can increase its growth.
This mounting pressure on workforces to meet ever-rising business targets can have a profoundly negative effect on mental health and wellbeing - resulting in employees experiencing symptoms of burnout, stress and depression.
As a result, existing employees are expected to work harder for longer, with some being promoted to positions they’re not qualified for just so the company can increase its growth.
This mounting pressure on workforces to meet ever-rising business targets can have a profoundly negative effect on mental health and wellbeing - resulting in employees experiencing symptoms of burnout, stress and depression.
The Unemployed
The labour shortage has a surprising impact on the unemployed. It’s easy to look at those who are unemployed and think, why don’t you just get a job? When the reality is that many people today lack the skills needed to fill the jobs advertised.
Sadly, the talent pipeline is drying up because businesses are not investing in their staff by training them in new skills. Intelligent CXO encourages us to think about the challenges we are navigating today; “Automation, Artificial Intelligence (AI), sustainability targets and the green economy are reshaping industries at lightning speed. Roles like data analysts, AI ethicists and climate risk offices didn’t exist a decade ago, yet they’re now critical to business success. We’re not equipping people with the skills needed to thrive in these emerging roles.”
Even more troubling is that 70% of organisations say that skills shortages are causing recruitment challenges and stifled innovation. While a growing economy demands adaptability and upskilling, businesses are failing their employees by cutting back on training; forcing employees into professional stagnation that makes it difficult for them to leave their current role and nearly impossible for them to find something better.
In a world of rapid technological advancement, this trend is particularly worrying as it highlights how our failure to invest in people will save businesses money in the short term but quickly lead to stagnation, both in business and the wider economy as a whole.
Sadly, the talent pipeline is drying up because businesses are not investing in their staff by training them in new skills. Intelligent CXO encourages us to think about the challenges we are navigating today; “Automation, Artificial Intelligence (AI), sustainability targets and the green economy are reshaping industries at lightning speed. Roles like data analysts, AI ethicists and climate risk offices didn’t exist a decade ago, yet they’re now critical to business success. We’re not equipping people with the skills needed to thrive in these emerging roles.”
Even more troubling is that 70% of organisations say that skills shortages are causing recruitment challenges and stifled innovation. While a growing economy demands adaptability and upskilling, businesses are failing their employees by cutting back on training; forcing employees into professional stagnation that makes it difficult for them to leave their current role and nearly impossible for them to find something better.
In a world of rapid technological advancement, this trend is particularly worrying as it highlights how our failure to invest in people will save businesses money in the short term but quickly lead to stagnation, both in business and the wider economy as a whole.
A future-proof outlook
If labour shortages are what’s preventing many businesses from investing in their employees and upskilling their staff to meet rising business demands, new strategies focused on training employees and investing in individuals need to be introduced.
To help spearhead the drive towards a future-proof economy, it’s time to make a positive change for the sake of the economy’s future.
To help spearhead the drive towards a future-proof economy, it’s time to make a positive change for the sake of the economy’s future.
Ready to start hiring? Talk to one of our experts today and let’s get started.
