Brussels: Eighty six percent of European employers have cut or frozen spending on skills and training in the last 12 months despite a continued concern over skills shortages, according to new research by Accenture commissioned by the Federation of Enterprises in Belgium (FEB) for the European Business Summit 2012 and published yesterday.
The survey of 500 senior decision makers from European businesses, government agencies and civil society organizations reveals that only 18 percent of companies and bodies plan to increase spending on skills and training over the next 12 months.
Yet, 43 percent of them currently face at least moderate skills shortages and 72 percent of respondents say Europe's businesses, policy makers and civil society organizations need to increase investment in this area.
"There's a double paradox in that European businesses are cutting back on skills development at the very time when they should invest more; and skills shortages are persisting in spite of a very large pool of unused talent here and across the world," said Mark Spelman, managing director, Strategy, Accenture.
"Employers recognize the need for counter-cyclical investment in Europe's human capital, but are struggling to find solutions. Getting Europe's skills markets to work better would unlock new enterprise, economic growth and job creation."
According to Accenture analysis in the report, if Europe's annual GDP growth rate was 0.5 percent (more than the zero growth forecast by the European Commission for the EU in 2012), it would take until 2019 for Europe to restore employment levels last seen in 2008. It would require two percent annual GDP growth to reach pre-crisis levels of employment by 2014.
The Accenture report, "Turning the Tide: How Europe Can Rebuild Skills and Generate Growth," analyzes three key challenges of Europe's skills markets that can be addressed through solutions built on improved insight and collaboration:
- Untapped pool of talent: Employers are not sufficiently exploiting the available skills of many of Europe's 25 million unemployed people or the additional 15 million who would like to work but who have withdrawn from the labor force owing to a lack of opportunity (including older people, mothers and youths). The report claims that employers tend to treat these very different groups as a largely homogeneous group and are therefore failing to recognize or address the variety of skills challenges. For example, 67 percent of decision makers surveyed think that employers undervalue the skills of older age groups.
- Poor labor mobility: While 47 percent of organizations surveyed admit they utilize the skills available within their country to a great or significant extent, this figure falls to 28 percent for those exploiting the wider European labor market. Cross border mobility is not the only problem. Many employers struggle to lower their own internal barriers and do not effectively measure or track skills within their own organizations.
- A lack of collaboration between sectors: While almost two thirds of respondents agree that Europe's skills challenges can only be solved through collaborative solutions between multiple stakeholders, only 29 percent collaborate with other organizations in their sector and just 18 percent with those in other sectors.
"Europe may have been facing constraints on financial capital, but it does not need to face a similar constraint on human capital," said Rudi Thomaes, chief executive officer of the Federation of Enterprises in Belgium. "Europe can improve the value, liquidity and the efficient allocation of its human capital if it takes urgent action that centers on collaboration between all sectors and players."
The need for all sectors of business, education and government to work together is reinforced by the fact that 63 percent of surveyed decision-makers say that Europe needs to recognize that skills challenges will be solved only through system-wide collaborative solutions. Fifty five percent of businesses believe that they need to take a key leadership role in convening multi-sector skills initiatives.
Among the report's key recommendations for employers, policy makers, educational organizations and other groups are:
Actions for employers
- Invest in data and analytics to profile internal talent and track the impact of employers' active support for these people.
- Tailor support to different groups within the labor market, including the provision of flexible working options to encourage older people and mothers to re-enter the workforce.
- Increase job rotations in organizations, across borders and create networks to develop talent among companies in the same sector.
- Build partnerships between small and large firms within supply chains to improve skills standards and relevance (cited by 34 percent of decision makers as important).
Actions for policy makers
- Improve certification to improve common recognition of skills and qualifications across Europe (cited by 55 percent of decision makers as important).
- Simplify complex regulation with respect to attracting and retaining global talent into Europe (cited by 59 percent of decision makers as important).
- Support the creation of partnerships between businesses and educational establishments to accelerate the way skills development can be better attuned to changing business needs (64 percent called for more business-university alliances).
"It's clear that employers not only recognize the challenges, they also intend to take the leading role in addressing them," said Spelman.
"Short term economic needs and the increasing pace of industrial change mean that Europe must build an adaptable, transparent and connected skills ecosystem. This can only be achieved by bringing together business, government and educational groups in ways that can anticipate changing market needs as well as react intelligently to them. Policy makers will play a critical role in enabling this collaboration and removing some of the structural barriers from Europe's skills market."