Turning the Tide

How Europe can rebuild skills and generate growth

We went out and we talked to 500 key business people and policy makers around Europe to find their views about how we could improve the potential within the labour market of the European union and at the heart of this research is two fundamental paradoxes. Seventy-two percent of the people that we talked to said that they believed that it was important that Europe invested more in skills and education and yet when you looked on the ground and what was happening in 2012 actually only 18 percent of businesses were going to increase their investment in education and so what we see is a gap between the need and what is really happening on the ground. And the second key paradox is one of a skills imbalance, 43 percent of businesses are saying that they are seeing skills shortages and yet we know that 23 million people are unemployed. And so it’s not just a question of unemployed people and finding jobs, it’s actually that we need the right skills for the right jobs.

But there’s also a really urgent need here, if we’re going to return to 2008 employment levels, if you’ve only grown at 0.5, half of a one percent, it will take until 2019 for us to get back to those 2008 employment levels. If we were to grow at nearer to two percent we would be back to those 2008 levels by 2014. So there’s a real need here to balance the right skills, with the growth opportunity. And as we looked at what was going on in Europe, we identified three fundamental weaknesses in the European labour market.

The first was around this untapped labour potential, 23 million people unemployed but when you put on top of that that there’s at least another 15 million people who would like to work, people who for example are older workers, young people, this group of people represents something like 40 million people in Europe who would like to work and yet what we actually find is that very often businesses tend to treat them as a homogenous group rather than distinct groups with distinct needs.

The second big issue is one of mobility and what we find is that when you go and talk to companies and businesses only 28 percent of them really believe that they are tapping into the true potential of the European labour market. Most of them are focused on what is happening in their locality, or in their specific country.

And then the third issue is around collaboration, what we find is that most businesses believe it is important to be able to collaborate more with government, with academic institutions to make sure that they have the right skills for their particular industry. And yet only 30 percent of the businesses that we talked to were really collaborating with other companies in their sector to ask and address the issue of are we getting the right skills that we need for the future of our industry? So, some really critical structural weaknesses around untapped potential, mobility and collaboration.

Accenture’s latest research is called Turning the Tide: How does Europe rebuild its skills base and generate new jobs. In a world that’s becoming increasingly more competitive, Europe has amazing untapped potential and yet we know that there’s a lot of unemployed people and this key research looks at some of the structural weaknesses in the European labour market and considers some of the policy recommendations to improve the situation.

And what the report identifies is some specific recommendations for what businesses and policy makers need to do. So for businesses I think there is a need to use more data and analytics to truly be able to map the skills base that exists within their organizations, particularly cross border. It’s about adopting more flexible approaches to be able to attract in some of that untapped potential. It’s about rotation of more jobs and it’s about working up and down the value chain so that big companies are working with smaller companies to really identify the needs of what the skills are that are going to be required in the industry sector going forward. And for policy makers it’s about certification, it’s about recognizing academic qualifications across border. It’s about mobility, it’s about helping high skilled mobile people to work across borders. And it’s also about collaboration; it’s about trying to help make sure that the public and private partnerships are working together in a way which is developing the skills for the future.

But perhaps the most important conclusion to end up, is that what business itself recognizes is that in this competitive world it needs to step up. Fifty-five percent of the people that we talked to said that business needs to take a more proactive role in terms of engaging in the skills agenda to make sure that we are tapping into that potential and we really are developing the skills that will help Europe be competitive in the future.

Learn more about the research: accenture.com/turningthetide

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with more than 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

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