Turning the Tide: How Europe can Rebuild Skills and Generate Growth

New analysis of Europe’s labor market, engagement with a panel of leading academics and policy experts, and a survey of 500 decision makers across Europe provides fresh thinking for business leaders and policymakers alike. Furthermore, at a time of low economic growth and high unemployment, this report offers practical actions for businesses looking to weather today’s storm while positioning for future growth.

Mark Spelman, Managing Director of Strategy at Accenture, discusses the key findings and what practical steps organizations can take now to address the skills challenge and position themselves for future growth.


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Europe is facing a challenging economic environment. Growth is stagnant, while unemployment has increased dramatically. Since 2008, the number of people unemployed for more than a year has grown by 61 percent from 6.1 million to 9.8 million.  During the same period, the number unemployed for less than a year has grown by 28 percent from 10.2 million to 13.2 million. Within this context, it is clear that if Europe is to realize future growth opportunities, it will need to have the right people and skills in place. Indeed, human capital is an essential driver to economic growth. However, there are signs that in managing the short-term crisis, organizations may be compromising their longer-term prospects.

• Organizations generally have been cutting back spending on skills: 86 percent of European employers have cut or frozen spending on skills and training in the last 12 months, and only 18 percent plan to increase investment on skills and training in the next 12 months.
    
• This comes despite the fact that 43 percent of employers face at least moderate skills shortages.
   
• Employers are not sufficiently exploiting the available skills of many of Europe’s 23 million unemployed people or the additional 15 million who would like to work but who have withdrawn from the labor force owing to a lack of opportunity.
   
• And while almost half say they utilize their domestic labor market in search of skills, only just over a quarter utilize the wider European pool of available skills.
   
• Fifty five percent of business leaders say that they themselves must take the lead in forming the multi-sector collaborative compacts that are required to address the challenges of Europe’s skills markets.

Europe’s labor market faces a double paradox. Just at it contends with a growing pool of unemployed talent, it is experiencing worsening skills shortages. And just as it needs to increase spending on skills and training, both private and public sectors are cutting back. This cautious approach is understandable in current circumstances, but is no less damaging for that.
 
In our survey, decision makers report the greatest skills shortages in international business skills, high-end analytics, manual working and digital literacy. At both ends of the skills spectrum, gaps are being encountered.
 
Meanwhile, as unemployment levels rise, there is the danger that those who have recently lost their jobs will find it increasingly hard to find work unless support is offered to them swiftly. Our research suggests that a person out of work for less than six months has a 43 percent chance of remaining unemployed for up to a year. But once they have been unemployed for that full year, their chance of remaining unemployed for a total of at least 18 months rises to 70 percent. Not only is urgent action needed to  bring these people back into work before they lose their skills, but that action needs to be tailored to support the individual needs of those wanting to return to the working environment.
    
The answers to Europe’s skills challenge are not all financial. They involve a more intelligent and collaborative approach that makes the most of the large skills base—both employed and unemployed—that Europe has at its disposal. By investing in its human capital, Europe can accelerate economic growth in the short term and build a more responsive labor market with more relevant skills to take on international competition in the longer term.

Sixty-three percent of decision makers surveyed indicate that skills challenges will only be solved through system-wide collaborative solutions. The good news is that businesses themselves say they are ready to lead those efforts.
 
Accenture’s research identified three critical imperatives:
 

1. Raising the water level: Activating untapped labor pools. Twenty-five million unemployed and 15 million “discouraged workers” (a group which includes older people, mothers and youth) constitute a large reservoir of untapped talent. Accessing it will require organizations to rethink how they approach recruitment and devise creative solutions to existing barriers, such as increasing the use of remote technology and adopting more flexible working patterns.
     
2. Increasing the flows: Improving mobility and transferability of skills. Europe must facilitate the flow of talent within its borders and from other parts of the world more effectively, but also within its own organizations. Analytics has a role to play in identifying skills and profiling potential candidates, while action policy makers need to streamline immigration and improve international recognition of qualifications.
     
3. Building bridges: Broadening and deepening collaboration. Over the longer term, Europe needs a more managed approach to address the structural shifts in labor markets. Cross-sector partnerships between business, government and education institutions, as well as partnerships between businesses, are needed to develop skills, and higher skills standards need to be cascaded throughout the supply chain.

Turning the Tide Insight: The double paradox in European labour markets
In this video, Mark Spelman, Managing Director of Strategy at Accenture, discusses the double paradox faced by the European Union in labor markets.


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Turning the Tide Insight: The structural weaknesses in European labour markets
In this video, Mark Spelman, Managing Director of Strategy at Accenture, discusses the structural weaknesses in the European labor market preventing us from returning to 2008 employment levels.


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Turning the Tide Insight: The skills and growth dilemma facing Europe
In this video, Mark Spelman, Managing Director of Strategy at Accenture, discusses the reason why growth is so important to returning employment in Europe to the same level as 2008


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