Skills shortage in Europe: the unemployed are being left behind

Demographic change and technological advances are fundamentally altering the labour market. An increasing number of workers are reaching retirement age, while younger cohorts are becoming smaller. Meanwhile, the so-called 'double transformation' — the transition to a digital and green economy — requires a multitude of new skills, such as those in automation and care. Conversely, professions that can be replaced by AI or those in carbon-intensive industries are becoming less important. In this environment, governments are under pressure to adapt their labour market policies to avoid job losses and maintain competitiveness. A new study, conducted in collaboration with the University of St Gallen (HSG), examined whether this realignment is actually taking place, and which measures are at the forefront.

Four European countries were examined

The researchers examined political developments in Denmark, France, Germany and Sweden. The researchers focused on two key policy areas: firstly, active labour market policy, which comprises measures to reintegrate the unemployed into the labour market. These range from further training opportunities to activation measures, such as benefit cuts for those who do not regularly apply for jobs. Secondly, the researchers analysed adult education, which primarily targets individuals already in employment. Professor Dr Patrick Emmenegger and Dr Alina Felder-Stindt from the School of Economics and Political Science at the University of St. Gallen (SEPS-HSG) conducted the study together with Professor Dr Giuliano Bonoli from the University of Lausanne, and it was funded by the Swiss State Secretariat for Education, Research and Innovation.

Further training is primarily for 'insiders'

Despite the shortage of skilled workers, the results show that there has been no clear departure from the previous 'activation logic' of active labour market policy, which mainly aims to quickly integrate unemployed people into the labour market, often in low-skilled jobs. Spending on further training programmes for the unemployed remains low or has even fallen. However, the researchers have identified numerous new retraining initiatives in adult education that explicitly address the shortage of skilled workers.
They explain this development using the so-called 'queue theory': as unemployment figures decline, active labour market policy increasingly targets people who are further removed from the labour market, such as immigrants with language issues, single parents, and older workers. Retraining these individuals is more complex and costly, which is why it meets with resistance in politics and business. Consequently, governments and employers prefer to provide further training for 'insiders', i.e. those already in employment, as it is often easier for them to acquire the urgently needed qualifications.

Risk of social division

However, this shift has profound social consequences. If retraining initiatives are mainly located in adult education and primarily reach people in employment, while active labour market policy continues to focus on activating social welfare recipients, there is a risk of dualisation of the labour market. While people in employment could improve their chances through further training, disadvantaged groups could lose access to the new skills they need, becoming further marginalised. The authors therefore emphasise the importance of establishing links between social benefit systems and adult education, ensuring that benefit recipients can also benefit from retraining efforts. "Such bridges are important not only from a social policy perspective, but also in combating the shortage of skilled workers," says Patrick Emmenegger.