The EU today faces an extraordinary challenge that unless addressed seriously with short, medium and long-term solutions, could make it a consumer of growth generated elsewhere, rather than actively producing it. There is no other way to define the lack of human resources and skills mismatch than having reached the level of a crisis.
It is now widely acknowledged that Europe has an ageing society, a trend that will lead to an insufficient number of workers to meet the demand that a global economic power requires to innovate, produce and grow. The effects can already be felt and will only grow over time. Furthermore, not only are we missing the required human resource, there are still categories in society that are underrepresented or simply idle. This refers to the level of female participation in the workforce that despite having improved in recent years, is still far from reaching its potential. Senior workers in good health and with a wealth of experience opting to retire who instead could be invited to stay in the labour market through attractive active-ageing policies. Early school leavers who with no qualification or training will struggle to meet the needs of advanced and dynamic labour markets. Educational systems and industry requirements are not sufficiently integrated and result in excess skills in some sectors and higher demand in others. The lack of skills in certain sectors is leading to high competition among enterprises that is superficially increasing labour costs in comparison to productivity and affecting their competitiveness.
The world of work is becoming increasingly digitalized. Future success depends on our ability to compete, and this will not be possible unless enterprises innovate, improve production processes or operational management through digital means. Both entrepreneurs and employees require digital skills to be relevant at the workplace. This requires an investment in interdisciplinary programmes in our education systems as well as better efforts to promote science, technology, engineering and mathematics, collectively known as STEM subjects. A long-term strategy and implementation plans are required for STEM skills. These skills are often thought of as being acquired at upper secondary and tertiary levels of education. This should not be the case. STEM skills can be acquired and should be more intensively taught at all levels of education and training, including at primary and secondary level. We also need to address a gender segregation problem in Europe as well in Malta when it comes to attracting people to study STEM subjects.
The digital transformation has also led to the inception of the collaborative economy, with various enterprises adopting so called disruptive models versus traditional businesses. This economic activity is providing opportunities for a growing segment in the labour market looking for either part-time, second jobs, flexible schedules, teleworking, or to pursue entrepreneurial initiatives. They also offer various job opportunities that can be considered as a stepping-stone into the labour market, from which individuals can obtain experience that can eventually lead to other career pathways. The collaborative economy should therefore be encouraged to grow, as this drives innovation and provides alternative cost-value added solutions to consumers. However, this should not come at the expense of precarious work. Regulators should therefore strive to find the right balance between protecting workers and avoid imposing unnecessary burdens on companies operating in this field.
Other traditional economic sectors such as the hospitality sector, which are entirely people based and therefore limited in the extent of automation that can be introduced, face a difficult reality to attract and retain labour, particularly due to seasonality, a stressful working environment, and competition on salary offering from other economic sectors itself. There are no quick fixes for the supply and skills challenges in the sector. But there are different solutions that ought to be considered and should guide future policy. These include better promotion for worker mobility as well as robotics development to take over certain tasks that could address gaps in the labour supply, which are certainly set to continue widening in the coming years.
Clearly, addressing skills related challenges mostly falls under the responsibility of member states. The EU however has a very important role to play through policy recommendations, as well facilitating and strengthening better cross-border cooperation. Setting voluntary benchmarks for member states to measure progress against could be useful, however they also need to take into consideration the starting point of countries in different categories and understanding that policies would require managed and gradual implementation to progress over time. For this purpose, EU tools such as the European Semester process can be further developed and used more effectively. The start of a new EU mandate should serve for a renewed impetus to deal with a skills crisis that will determine Europe’s future and economic prosperity in the coming years.
Simon De Cesare is president of the Malta Business Bureau. The MBB is the EU-business advisory and support office of the Malta Chamber of Commerce, Enterprise and Industry, and the Malta Hotels and Restaurants Association. Mr. De Cesare can be contacted on firstname.lastname@example.org
This article was first published on the 22nd July in the Sunday Times of Malta.