Improving job quality is key to addressing labour shortages in the European Union.

The European Commission has designated this year the European Year of Skills, affirming: ‘Helping people get the right skills for quality jobs and helping companies, in particular small and medium enterprises, address skills shortages in the EU is what this year is all about.’
Certainly, as EU economies recover from the pandemic, labour shortages are top of the agenda. Achieving the green and digital targets and ensuring the delivery of essential services—such as health and long-term care as the population ages and the working-age population shrinks—is a serious concern for policy-makers across the union.
Employers face daily challenges to meet production targets, deliver quality services and innovate and grow their businesses due to lack of (suitably trained) workers. Existing staff often face intensified work if their employer is unable to fill vacancies in a timely fashion. By fostering turnover of workers, this can potentially aggravate shortages in affected organisations and occupations.
If the EU really wants to plug these employment gaps, we need to talk about the other reasons for Europe’s lack of labour—including low pay, poor working conditions and gender segregation in the workplace.
Fight for talent
By the end of 2022, the average EU vacancy rate had reached a historic high of around 3 per cent, according to Eurofound research. Close to a third of EU employers say these shortages are limiting their ability to produce and to deliver services. As of 2023, the fight for talent remains most acute in Austria, Belgium, Czechia, Germany and the Netherlands (see map), although in certain sectors and occupations shortages are evident in most member states.
Vacancy rates in EU member states, Q1 2023
The pandemic aggravated the shortages which have for many years been apparent in health and in information and communication. In 2022, 6 per cent of European enterprises (up from 2.6 per cent in 2014) were struggling to find workers with specialist ICT skills. Sectors hit hardest by pandemic-related restrictions—such as construction, hospitality and retail—are struggling to rebuild their workforces, as many former employees have taken up jobs with better working conditions.
To make matters more complicated, new skills are increasingly needed to drive Europe’s green and digital transitions. This ‘skills mismatch’ is particularly notable in construction, where lack of bespoke skills is putting member states’ ambitious carbon-neutrality targets at risk.
Eurofound’s research also shows that many countries have taken steps to address these issues through stronger labour-market policies and measures in education and training, focused on the skills and occupations demanded in the labour market. These include the ramping up of digital-skills training in schools and for the unemployed.
In construction, more and more emphasis is being placed on the specific skills needed in sustainable new construction and the retrofitting of homes and commercial premises. In health, specialist and continuing training courses are being offered to help address skills gaps particularly evident in specialisms such as geriatric care and mental health.
Job quality
But this is not just about skills. Evidence shows that such measures are often not sufficient to solve labour shortages, because skills mismatches are only one—albeit important—part of the picture. In order to address shortages effectively, we must go beyond skills and fully understand the drivers behind the lack of labour supply.
Analysis of data from the European Working Conditions Telephone Survey (EWCTS) 2021 shows that labour shortages are particularly prevalent in sectors with poor job quality—as measured by an index that compares ‘job demands’ (physical and psychological hazards, work intensity and unsocial working hours, among others) with ‘job resources’ (such as task discretion, flexible working hours and training opportunities). It finds that health is the most ‘strained’ sector, followed by transport, agriculture, commerce and hospitality—all sectors experiencing significant labour shortages (albeit largely seasonal in agriculture).
Labour-market slack—the gap between the volume of work desired by workers and the actual work available—was at its lowest in a decade in late 2022, although again this varies between countries. There remain opportunities to integrate underutilised labour into the labour market.
Most of the measures to address shortages in health and long-term care seek to address pay, working conditions and career opportunities, with a view to retaining as well as recruiting staff. This works to a certain extent: some such initiatives have helped retain skilled workers in central- and eastern-European countries. But it is not always enough to attract workers to remote towns and villages, where poorer healthcare infrastructure and other quality-of-life factors, such as more limited educational provision, can act as a deterrent.
While specific payments to attract healthcare professionals to such regions have shown some impact (for example, in Bulgaria and Latvia), focusing on pay alone is often insufficient without other interventions to increase the attractiveness of working and living conditions. Individuals also want greater autonomy over working hours, access to training, career prospects and work they find meaningful.
Segregated by gender
Another feature of the sectors experiencing shortages is that they are highly segregated by gender, as are occupations within them. Health is heavily female-dominated, while information and communication and construction are heavily male-dominated, although the reverse may be the case for specific occupations (surgeons are mostly male, for instance).
Addressing gender imbalances at work must be prioritised, as should efforts to encourage women outside the labour market to take up work. Analysis of labour-market slack and the employment rates of women, as well as of persons with disabilities and third-country migrants, show that even in tight labour markets untapped potential exists.
Incentivising such groups often however requires measures beyond training or pay, which demands an understanding of the barriers to integration and how to tackle them. Initiatives around care and work-life balance are typically required, as well as greater emphasis on the recognition of qualifications gained abroad and assistance in overcoming or accommodating health issues.
While an initiative such as the European Year of Skills is welcome, and improving skills can certainly go some way in helping to address labour shortages, it is not a silver bullet. To address these challenges effectively, a clear grasp of the drivers behind shortages in specific sectors and occupations and the policy context is needed. Targeted measures to address shortages can then be developed, with the involvement of key stakeholders—including the social partners, who are best placed to understand current and future requirements in the labour market.