Skills are the essential ingredient to drive EU economic growth [Promoted content]

Think about how the EU can achieve its bold ambitions on climate and digital technology, and we often focus on investment, regulation and public opinion.

By Gilly Lord, Public Policy and Regulatory Affairs, PwC United Kingdom

But there is another component that is just as important and which could superpower the EU’s bold plan: the availability of necessary skills. But whether you look at the employer or employee side of the skills equation, challenges abound.

PwC’s latest CEO Survey sheds light on the challenges for employers. More than half (57%) of the circa 1,300 EU CEOs we quizzed, said that labour and skills shortages will significantly impact profitability in their industry over the next 10 years. This finding is echoed in a survey of employers across eight countries looking for tech talent. The survey, by non-profit organisation Generation, found that more than half (52%) find it difficult to hire for entry-level tech positions.

What is less well understood is the dynamic within the workforce – the employee side. To help understand that challenge, we surveyed almost 16,000 workers across the EU to understand their views on upskilling, and compared them with a further 38,000 interviews with workers outside the bloc.

The first step to upskilling the workforce is for workers to understand the need for skills and lifelong learning. The survey suggested that awareness is not yet where it should be in the EU. While 44% of workers in APAC felt that the skills needed for their job will change significantly in the next five years, the EU figure was just 26% – well behind APAC and also three percentage points behind the US. There is a task for policy makers and employers to improve the flow of information so workers are better informed and better able to make choices about how to prepare for the labour market shifts that generative AI and the green transition will bring.

This should be important to policymakers thinking about how to set the economy up for success,  but our research suggests it should be even more important for those concerned about inequality. The data from our survey shows that EU workers who say their job already requires specialist skills are 3.5 times more likely than those in non-specialist jobs to anticipate the need for change. They are 2.5 times more likely to have a clear sense of how those skills will change going forward. There is a risk of self-reinforcing loops as the skilled become more skilled, and those lacking skills get left further and further behind.

Business leaders have a crucial role to play to prevent this negative cycle. Our survey shows that EU workers are considerably less likely than US or APAC workers to feel confident that their employer will provide opportunities to develop key digital skills, for example, within the next five years.

Fortunately, there is a bold solution to some of these issues. It’s called a ‘skills first’ approach to talent, focusing on a person’s skills rather than the qualifications they have, what university they went to or what work experience they have gained.

The goal is to reduce mismatches in the labour market by reducing unnecessary barriers inadvertently created by employers, and giving workers more opportunities to use their skills. For example, our survey found that 34% of EU workers say they have skills that are not evident in their CV, showing there are skills not being accounted for in hiring processes.

The approach, outlined in our report with the World Economic Forum, suggests a straightforward ‘skills first’ framework of action to help businesses upskill and reskill their workforce. Companies should identify current and future skills gaps; highlight specific skills requirements in job descriptions; develop skills-based training programmes and pathways, and support lifelong learning.

But ‘skills first’ is just part of the solution. It isn’t appropriate for some kinds of jobs and does not address the need to inform workers about the scale of change to come. It is vital that employers and policymakers continue to find new ways to make progress – not just because it can address inequality and opportunity, but also for purely economic reasons. As my colleague Laurent Probst remarked as he closed a recent event on the future of skills: ‘Without skills, there is no business, there is no innovation’.