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Productivity in labour markets

Employment and Skills Roundtable reveals key drivers for growth and competitiveness in Europe.

Overview

Europe is facing constraints to growth and prosperity from its aging population, with the percentage of people in working age (aged 16-64) expected to drop from current rates of 65-70 percent to less than 60 percent of the total population by 2030.

Additionally, workforce participation rates among certain demographic segments, such as youth, are declining and putting a further curb on economic recovery. With more than 3.5 million people under 25 years old out of work, a significant rethink and concerted action is required from policymakers to respond to the challenges in the European jobs and skills market.

To investigate these important issues, Accenture launched a flagship study on Europe’s labour markets—“Towards World-Class Jobs and Skills in Europe”—exploring key themes and topics on the European employment agenda with a focus on how labour market productivity drives growth and competitiveness. This executive briefing builds on some of the key issues and insights explored in the study and presents outcomes from the European Centre for Government Transformation Roundtable on Employment and Skills, held in Brussels on 18 March 2014.

Background

Economic recovery has been slower in Europe, The “two-speed” recovery in Europe has been evident from the marked divergence in unemployment rates between countries such as Germany (5.1 percent) and the UK (7.1 percent) on the one hand, and Greece (27.5 percent) and Spain (25.6 percent) on the other.

Europe is also lacking in available skills. Estimates show that Europe will experience substantial shortages in key sectors, including technology and science. According to the European Commission, there will be a shortfall of 900,000 ICT professionals in Europe by 2015. These deficiencies could have long-term negative effects on the growth prospects of the European labour market.

In this volatile environment, there is a growing consensus among policymakers that jobs and skills need to be at the heart of a European recovery. Bold policy and delivery reforms are required to respond to the fundamental challenges in the labour market, and ensure Europe’s global competitiveness.

Analysis

Economic recovery has been slower in Europe, The “two-speed” recovery in Europe has been evident from the marked divergence in unemployment rates between countries such as Germany (5.1 percent) and the UK (7.1 percent) on the one hand, and Greece (27.5 percent) and Spain (25.6 percent) on the other.

Europe is also lacking in available skills. Estimates show that Europe will experience substantial shortages in key sectors, including technology and science. According to the European Commission, there will be a shortfall of 900,000 ICT professionals in Europe by 2015. These deficiencies could have long-term negative effects on the growth prospects of the European labour market.

In this volatile environment, there is a growing consensus among policymakers that jobs and skills need to be at the heart of a European recovery. Bold policy and delivery reforms are required to respond to the fundamental challenges in the labour market, and ensure Europe’s global competitiveness.

Recommendations

Expert participants in the roundtable discussion conclude that to respond to the productivity challenge, actors in the jobs and skills ecosystem (i.e., policymakers, businesses and education providers) need to adopt a holistic, long-term view of reforms and invest in productivity-enhancing measures. A key focus should be up-skilling the workforce and innovating in industry sectors that add high value.

Working together—Policymakers and businesses need to take concerted actions to ensure that future job growth also means sustainable growth and improvement to the standards of living. Furthermore, there is increasing consensus among policy officials that businesses should also take responsibility in providing productive, high-quality employment.

Government catalysts—There is a general consensus among Europe’s policymakers (represented at the Roundtable) that government needs to have a greater and more proactive role in improving the productivity of Europe’s labour force to rekindle growth and competitiveness. Europe can also learn from global leaders in innovation and labour productivity, like Singapore.