Nobel economist: Rapid technological changes drive EU skills shortages

Skills shortages across the EU can be explained by technological changes so rapid that workers and companies alike are struggling to keep up, labour economics scholar and Nobel prize winner Christopher Pissarides told Euractiv in an interview on Friday (1 December).

Across the bloc, many companies are struggling to hire new staff, resulting in suboptimal production levels and rising fears some “vital” industries may be at risk of slowing down too.

Skill shortages, a priority issue for governments especially since the pandemic, “is coming from more rapid technological changes now than we ever experienced in the past,” Pissarides told Euractiv.

The London School of Economics scholar and Nobel prize winner, who specialises in labour economics, is adamant the intrusion of advanced technological tools in everyday work life explains skills differentials between what businesses are looking for, and what workers can actually provide.

“In the space of six to eight years, the tech skills companies require have changed dramatically […] and it’s very difficult for workers to keep up,” he said.

This doesn’t hold for high-skilled jobs only, but industrial ones too. As governments invest in the green transition and look to repatriate industrial production in the EU, hundreds of thousands of new jobs are set to be created.

“We still equate industrial jobs with dirty manual work. In fact, most manufacturing jobs require working with computers and robotics, and knowing how to control [high-tech machinery],” Pissarides said.

He also refutes the claim that robots are taking human jobs. “I’ve always said: let the robots take the jobs, there will be plenty more jobs to come” as a result of automation.

Reskilling here and now

Are governments and the private sector effectively grappling with the reality of such a skills mismatch?

“The only solution is for companies to set aside time for training on an ongoing basis, get comprehensive training options on companies’ intranet [and] ensure frequent communication with line managers and senior leaders to agree on training objectives,” the scholar explained, adding that the onus should be on the private world, not on government, to provide training and reskilling programmes.

“The best training is the one provided on the job,” Pissarides argued, citing studies which show that best-performing firms are those that “upgrade the skills of their employees all the time, even if they don’t plan to change [production strategies]”.

The public sector must only be a “residual training medium”, ready to step in to support the unemployed and smaller companies that cannot afford in-house training programmes.

Flexibility and wellbeing

It’s one thing to think of reskilling – but how do we get people into the labour force in the first place?

“I hear company leaders say we must cut benefits and that will bring people back into the workforce,” Pissarides said. However, studies have shown that is not proven to work. (can you link any studies here to strengthen the argument?)

Instead, “we need to remove barriers to give workers the flexibility they need,” he said. Part-time work or four-day weeks are some examples of new, more flexible working arrangements that could help cater for different lifestyles and needs.

“The ultimate objective is wellbeing at work […]. Don’t put obstacles in people’s way back to work, or force them to come back [by cutting benefits],” the scholar said, arguing that companies and governments should instead focus on incentives and different working patterns – through the help, when applicable, of new tech tools.

This will be key to improving productivity levels in the EU, Pissarides said, which so far are showing “stark divides” among member states. New ways of working could contribute to boosting growth, reaching a better level playing field across the EU, and reducing general debt levels, as European leaders look into reforming the bloc’s fiscal rules.

Keeping debt levels in check comes “either by finding ways to raise productivity growth above the rest or implement austerity policies”, the professor said. So far, in his view, the latter has been a more common policy choice by decision-makers, to the detriment of the former.

Immigration conversation “flawed”

Allowing more immigrants into EU labour markets would open new markets for finding skilled staff. However, the debate is stifled by heavy politicisation and a dominant narrative that migration at large is a threat that must be controlled.

“The talk about immigration is completely disjointed,” Pissarides said. On the one hand, immigrants are badly needed in critical sectors including construction or health care, and contribute to providing generally higher-quality services.

On the other, Europeans are being fed with a scaremongering discourse, and immigrants are presented in a negative and risk-heavy light.

Pissarides’ message is clear: stop fearmongering, start employing.

[Edited by János Allenbach-Ammann/Nathalie Weatherald]