Skills gap in Europe: building on university-industry collaboration

Our European economies and societies have been experiencing unprecedented transitions in the past 20 years, from digitalization to the green economy and a progressive ageing of the population. Along with these transitions, we are seeing a persistent skills gap.

The skills gap refers to the divide between the skills employers expect employees to have and the skills employees and job seekers actually possess.

Well-functioning education and training should provide people with the skills required in both their current job and in any future one, but mismatches occur for different reasons. The consequences of skills mismatches are actually quite dangerous and can have negative consequences on countries’ productivity levels, as allocation of human resources is not efficient. What’s more, skills mismatches can also have an impact on job satisfaction, employees’ well-being and wages.

How big is the problem?

Measuring the extent of these mismatches and gaps is not an easy task. On European level, different data sources may be used to get an indication of the dimension of the problem. It should however be noted that currently no official statistics and indicators for measuring skills mismatch exist.

One way to do it is through surveys. Cedefop produced an indicator defined as the percentage of people who report that their skills correspond well with the duties in their job. In 2015, only 58% of workers in the EU reported that their skills were matched to the jobs they performed. On the business side, Eurochambres’ 2020 annual economic survey results show that 43% of companies indicated “lack of skilled workers” as a challenge they expected to face in 2021.

Eurostat currently has two experimental statistics measuring vertical (over-qualification) and horizontal (by field of education) mismatches. On average in the EU, almost 28% of employed persons worked in occupations that do not correspond to the field of education they have attended, and almost 22% of high-skilled persons (who have completed tertiary education) were employed in occupations that do not require tertiary education.

Some skills are more in demand than others. This is particularly true regarding digital skills: currently, however, 42% of European citizens do not have basic digital skills, despite the increasing need for such skills in all jobs. New skills requirements are emerging for “green jobs” as a consequence of the socio-ecological transition we are experiencing, which will further change the labour market in terms of skills and qualifications being demanded.

EU Policy response

The issue has gained growing attention in EU Policy and the European Commission has recently launched a new and comprehensive European Skills Agenda, following the first one launched in 2016. The actions in the agenda focus on skills for jobs with a view to enhance collaboration with Member States and between stakeholders — trade unions, companies and education institutions — to find solutions to the problem.

Businesses need workers with the skills required to master the green and digital transitions, and people need to be able to get the right education and training to thrive in life.

Collaboration efforts should have the following main goals:

1. Improving the quality of skills and their relevance for the labour market;
2. Making skills more visible and comparable;
3. Improving skills intelligence and information for better career choices.

Ultimately, through, it remains a Member States’ responsibility to design well-functioning education and training policies as well as employment policies (for an overview of current policies for skills matching in place in different Member States have a look at Cedefop’s database here).

Focus on higher education

Some of the actions in the European Skills Agenda are particularly relevant for higher education. Action 5: “Rolling out the European Universities initiative and upskilling scientists” includes a commitment to engage in the full rollout of the European Universities initiative and to improve university-industry collaboration by bringing academia and industry together through a new Talents-On-Demand knowledge exchange to meet companies’ research and innovation needs. It also includes the need to develop innovative teaching and learning through a more challenge-based and transdisciplinary approach, while accompanying the transition of higher education institutions to more entrepreneurial organizations. Another interesting element in the agenda is the European approach to micro-credentials: they may open education up to more people because of their flexible and short-term nature, and this could allow targeted reskilling or upskilling in line with market demands. It all sounds right. But how do we translate this into action?

Universities and higher education institutions can play an important role at different phases of the learning path. By adapting their core undergraduate and graduate degrees offer to better reflect the current demand for skills, but also by enriching executive education or life-long learning opportunities within the same institution. An example of the first can be found in many business schools which, in the past couple of years, added to their undergraduate and graduate offers programs focusing on topics that prepare to new and future jobs — such as Computer Sciences, Artificial Intelligence, Data Science, Business Analytics and Cybersecurity. A more or less timely reaction to new labour market trends which can bring huge benefits to students, the University and employers. However, this is more of an exception than a rule. Europe counts more than 2500 Universities, of which many are publicly funded and cannot count on the same type of governance and resources that some schools have — including strong relationships with employers.

Adding up IT and Data Science-related degrees to a University’s offer may not be enough, though. Apart from digital skills being high in demand, the labour market increasingly demands transversal skills such as the ability to think critically and creatively, adapt to change and work in teams. But how do you teach that? Past research has suggested that both out-of-class experiences (such as number of unassigned books read) and in-class variables (such as type of courses taken) influence students’ critical thinking. Probably this holds as well for the ability to adapt to change and work in teams: academic in-class experiences are not enough.

Something more should be done to encourage extra-curricular experiences among University students (such as associations, volunteering activities, students groups, etc.) but something more could be done in-class as well. Students could be given more opportunities to put theory into practice, experience a variety of real working life scenarios, connect with industry upstream while still studying and more directly — for example by working on current and diversified projects and challenges from different types of organizations, instead of the usual case studies from big companies or nothing at all. Career and experiential learning opportunities provided by Universities (if and when they are, in fact, provided) are often limited to big corporate realities leaving out a whole precious world of small and medium enterprises, startups, the public sector and the not-for-profit sector. Close collaboration between universities and the “outside world” to reduce the skills gap and increase youth employment and employability should be carefully planned and incentivized; it is still a work in progress but it has great potential in facing the challenges arising from the changing world of work.