European Commission Releases Action Plan Tackling Labour and Skills Shortages

Brussels, 26 March 2024 – The Commission has released its long-awaited action plan to address chronic labour and skills shortages plaguing the European Union. Announced on Wednesday, the action plan acknowledges the severity of the shortages and outlines steps at the EU, national and social levels to mitigate the consequences. 

This analysis will unpack the five key steps of the action plan, the main points for entrepreneurs and SMEs, and areas for improvement regarding inclusive policies to address the shortages. 

Acknowledging the Problem

The Commission conclusively recognises that chronic labour shortages are plaguing European businesses, identifying causes ranging from poor working conditions, demographic shifts, rapid technological advancements across sectors and a push in the last years for increased development of the EU’s industrial sector. The Commission has identified 42 occupations across EU member states that are experiencing shortages. 

The action plan is the culmination of several EU initiatives, including as a key deliverable from the European Year of Skills, a year dedicated to skills development and training across the EU to build momentum for the EU 2030 social targets of at least 60% of adults in training every year, and at least 78% in employment. 

Taking into account the Pact for Skills, the Porto Summit targets and the Val Duchesse Social Partners Summit held in collaboration with the Belgian Presidency of the Council of the European Union, the plan identifies five key action points:

  • Supporting the activation of underrepresented people in the labour market (NEETs)
  • Providing support for skills development, training and education
  • Improving working conditions in certain sectors
  • Improving fair intra-EU mobility for workers and learners
  • Attracting talent from outside the EU

What are the improvements for European SMEs and entrepreneurs?

The European Commission will prioritise skills development and employment across the EU, including funding projects that focus on improving zero long-term unemployment and the activation of NEETs (young people not in employment, education or training). 

The Commission will also co-finance vocational training and education centres across Europe to address skills gaps. A review is planned for increased pension flexibility to allow greater combining of pension income with salary as well as a review of sick leave policy at the EU level. 

Member states will be encouraged to revise education curricula, pursue benefit and tax reforms, and support the digitalisation of social security records to decrease the administrative burden of cross-border labour in the EU. 

Social partners will be supported in improving working conditions through updates to laws on collective bargaining, along with further support in activating underrepresented groups for a more dynamic and inclusive labour market. 

Inclusive Entrepreneurship Policies

While funding to upskill and activate NEETs and increase access to VET and apprenticeship schemes is welcomed, the action plan lacks specificity in identifying underrepresented groups and the specific barriers that prevent them from entering the labour force. 

There is a large potential for social benefit reforms in member states, including schemes such as welfare bridges, where unemployed people can convert welfare payments into funding for entrepreneurial ventures. Providing training and mentorship programs tailored to underrepresented groups’ needs can enhance their employability and entrepreneurial prospects.

Most importantly, clearer guidelines and actions for increased labour migration from third countries are needed. While committing to continuing to engage in talent partnerships to enhance legal migration pathways and further work setting up the EU Talent Pool, more concrete actions are needed to open up migration pathways to fill labour shortages. 

An Agenda for Inclusive Entrepreneurship

To better support underrepresented groups in the labour market, the EU needs to develop a clear policy on inclusive entrepreneurship. 

UNITEE’s European Agenda for Inclusive Entrepreneurship outlines key policy initiatives to unlock the potential of diverse entrepreneurs across Europe. From fostering an inclusive environment to empowering entrepreneurs, the agenda offers a strategic framework for sustainable economic growth and societal progress.

By adopting its principles, policymakers and stakeholders can leverage inclusive entrepreneurship as a vital tool in addressing labour shortages, promoting economic growth, and fostering social cohesion throughout the European Union.


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