ELMI - Network of European Labour Market Research Institutes

Labour Shortages: A Problem everywhere?

The policy session on „Labour Shortages: A Problem everywhere?” at the EALE conference 2024 was organized and chaired by Bernd Fitzenberger (IAB) on behalf of ELMI http://www.elmi-network.eu/

Panel Participants were:

Tito Boeri, Bocconi University, Milan
Stéphane Carcillo, OECD, Senior Official from the Employment, Labour and Social Affairs Directorate
Bernd Fitzenberger, Institute for Employment Research (IAB) and Friedrich-Alexander-University Erlangen/Nuremberg
Barbara Kauffmann, European Commission, Brussels, Directorate F - Employment and Social Governance, Analysis

Report on the Policy Session

The panel addressed the issue of labor shortages, which are paramount in nearly all OECD countries. The discussion explored several causes, including demographic change, the growing need for workers to master the ongoing economic transformation processes in the economy, and the increasing demand for labor-intensive services in aging societies. Additionally, despite significant technological advancements like digitization and the rising use of artificial intelligence (AI), productivity growth remains relatively low. The panel also turned to potential policy measures to mitigate labor shortages and promote economic progress.

Barbara Kauffmann addressed “Labour and skills shortages in the EU”. She highlighted how labor shortages have been rising across most EU Member States over the last decade, posing risks to business activities, investments, and the EU's competitiveness. Demographic shifts, such as a shrinking working-age population, are key drivers of these shortages. Her presentation also pointed to the poor working conditions in many occupations with labor shortages and to groups which are underrepresented in the labor market, such as people with disabilities and older workers. Structural changes in skills demands, especially in green and digital transition sectors, are contributing to the growing shortages. To address these challenges, policies include improving working conditions, enhancing intra-EU mobility, supporting skills training, and attracting talent from outside the EU.

Presentation of Barbara Kauffmann:

Based on the analysis in the 2024 OECD Employment Outlook, Stéphane Carcillo gave an overview on “Labour Shortages in the OECD” and the challenges that G20 countries are facing in the labor market. While the labor market is slightly easing, it remains tight, especially in certain sectors, i.e. labour shortages persist. Carcillo notes that low-pay industries are no longer the primary drivers of shortages, though significant tensions persist in healthcare and other sectors, such as education and professional services. The presentation also emphasizes key factors behind labor shortages, including demographic changes like aging populations, shifts in worker preferences (such as demand for better working conditions), and the evolving skill requirements driven by AI, digital, and green transitions. Structural shifts and job transitions are also contributing to labor market tightness. To address these challenges, Carcillo advocates for policies encouraging labor mobility, activating underrepresented groups in the workforce, and improving job quality to attract workers.

Presentation of Stéphan Carcillo:

The presentation by Tito Boeri, titled “From Labour Slack to Labour Shortages”, discusses the current labor market challenges in Europe, where labor shortages have become widespread across various sectors. These shortages are likely structural, not just cyclical, as many high-demand occupations were already facing issues before the COVID-19 recovery. Tito Boeri also stresses that key causes include skill mismatch, demographic changes (e.g., population aging), and poor working conditions in low-wage jobs like salespeople, cleaners, and cooks, which are deterring workers. Certain sectors face shortages due to the absence of specialized training, particularly in fields like healthcare and engineering. Potential solutions include improving vocational training, increasing labor force participation (especially of women), addressing workplace conditions, and increasing immigration to mitigate the effects of an aging workforce.

Presentation of Tito Boeri:

The presentation "Labour Shortages in Germany" by Bernd Fitzenberger explored labor market challenges in Germany. Despite record-high employment levels, Germany faces a significant shortage of skilled workers, especially in sectors like construction and hospitality. This is compounded by a persistent mismatch between available jobs and workers, with unskilled labor facing high unemployment rates. The labor market remains tight, but worker flows have declined since 2019, exacerbating the problem. Aging demographics and a decrease in apprenticeship programs further contribute to the structural challenges. Despite there being fewer vacancies in the second quarter of 2024 than a year ago, shortages are expected to continue for the foreseeable future.

Presentation by Bernd Fitzenberger:

Info: The Policy Session on „Labour Shortages: A Problem everywhere?” at the European Association for Labour Economists (EALE) Conference 2024, 6 September at the Norwegian School of Economics (NHH) in Bergen was organized by ELMI, the Network of European Labour Market Research Institutes http://www.elmi-network.eu/