Aligning skill shortage strategies and Cohesion Policy objectives

While flows of labour are a solution to acute skill shortages in some regions, they generate obstacles to economic development, green and digital transitions and public service provision in others. Could interregional cooperation help make them mutually beneficial?

A recent European Commission report finds that skill shortages persist in large parts of Europe and are expected to continue in years to come. This is partly a result of ageing as the “baby boom” generation reaches retirement age. The COVID crises also reshuffled the cards of labour markets across Europe. Many employees decided to change jobs and improve their work-life balance.

In this context, the lack of qualified personnel has become a major challenge in many sectors and regions.  Job vacancy rates have increased substantially across Europe. Annual average rates above 4% were observed in the Netherlands, Belgium, Czechia and Germany in 2022. Skill shortages can limit economic growth, jeopardize green and digital transitions and lead to shutdowns of healthcare facilities. Regional and local authorities therefore go to great lengths to address them.

Difficult to mitigate impacts of structural drivers, in spite of major EU initiatives

They are supported in this endeavour by the European Union. We’re in the middle of the European Year of Skills, which will run until May 2024. The European Commission has also recently launched a Harnessing Talent Platform and is developing a Talent Booster Mechanism “to support regions in training, retaining, and attracting people”. The Interreg Europe programme has taken this opportunity to highlight its numerous policy recommendations, good practices and projects dealing with these issues.

These initiatives help to optimise the use of available human resources, improve dialogues between businesses, public authorities and higher education institutions and improve vocational training offers. They can also stimulate emulation among local and regional authorities when it comes to offering attractive living conditions for skilled labour, including high-quality services of general interest.

However, they can only to a limited extent mitigate the impacts of major drivers of skilled labour flows such as differences in wage levels, career perspectives and working conditions. In 2022, shares of workers with a tertiary degree working abroad approached 20% for Croatia, 17% for Romania and 10% for Lithuania. These are only a few examples of European countries where the emigration of skilled labour is identified as a major obstacle to regional development.

Current and future imbalances call for a strengthening of Cohesion Policy

As the European Union nurtures ambitions to accelerate its enlargement to the Western Balkans and to Ukraine, additional flows of skilled labour may be expected in the years to come. While they appear unavoidable in a transition period, strategies for a balanced distribution of skills and talents in the medium to long term are called for.

This is a major argument in favour of a strengthening Cohesion Policy after 2027. Only territorial approaches to the reduction of disparities can ensure that EU spending contributes to improving these regions’ attractiveness for skilled labour. Continued reflections on how Cohesion Policy can generate the best produce desired results in all regions concerned by such skilled labour emigration are needed.

Interregional partnerships to promote more virtuous practices?

One interesting approach could be establishing alliances between skilled labour ‘receivers’ and ‘emitters’. It is a paradox that EU Member States and the European Commission conclude an increasing number of “Skill Mobility Partnerships” with third countries, but that no equivalent mechanisms are established within the EU or the EEA. Skill Mobility Partnerships typically promote circular migration and other win-win arrangements.

They make it possible to fill labour shortages in destination countries while developing competences in countries of origin. More explicit European-level positions on desired patterns of skilled worker migration could help orient stronger initiatives at local, regional and national levels.

From a purely economic point of view, a concentration of skilled workers in Europe’s most prosperous regions offers the best perspectives for value generation and growth. However, the European project is weakened if unfair recruitment practices undermine balanced regional development. Only in some policy areas, initiatives are carried out to promote fair recruitment policies across different EU regions, such as for instance, the health sector.

Green and Digital twin transitions should not be hampered by a lack of skilled workers in less affluent Member States. Regional initiatives to attract talented and skilled workers therefore also need to consider their impacts in other territories. In this regard, European criteria for ‘good practice’ remain to be defined.