New skills and jobs in Europe: Pathways towards full employment

This report was written by Günther Schmid and supervised by Philippe Keraudren. It was published by the European Commission, Directorate-General for Research and Innovation, European Research Area, Social Sciences and Humanities in July 2012

Introduction: setting the scene

Europe needs more people in employment. About 24 million people are still unemployed (9,9 %), long-term unemployment is deteriorating, levels of job creation are too low and many of the newly created jobs are of low quality. The labour market for young people remains depressed with a level of 5.5 million unemployed (22.1 %)¹. Why is it that our policies do not work? Why is it that even when unemployment improves, it happens at the cost of increasing inequality and labour market segmentation? Are new skills, as the Europe 2020 flagship initiative ‘An agenda for new skills and jobs’² suggests, the solution?

Skills do indeed matter. They ensure the right application of knowledge in jobs in order to complete tasks and solve problems. Old and new jobs will not be sustainable without the continuous evolution of skills. Without the creation of new job opportunities, skills and individual life plans will be wasted. Improving people’s skills and better utilising their skill potentials ‘is a real “win, win” for all – for the economy, for society, for employers and, of course, for individuals themselves’³. It is obvious to policymakers that unemployment is closely related to low skills and employment and labour market participation to high skills. But despite progress in recent years, ‘Europe is still not sufficiently skilled. Nearly one third of Europe’s population aged 25–64 – around 77 million people – have no, or low, formal qualifications and only one quarter have high-level qualifications. Those with low qualifications are much less likely to upgrade their skills and follow lifelong learning.’⁴

This report documents what research says about jobs and skills in Europe.

1. In particular, research convincingly shows that education systems characterised by more equal access to education and continuous vocational training are associated with lower levels of unemployment and higher levels of employment.
2. Research shows that ambitious labour market policies that support a high variability of employment contracts over the life course, and that allow a high level of external as well as internal job-to-job transitions through active securities (making transitions pay), tend to be associated with higher levels of job creation.
3. Research reveals the importance of work organisation for skill formation, skill maintenance and skill utilisation, and emphasises that it is not enough to make people fit for the market (through raising their individual skills) but that it is also of high importance to adjust workplaces reasonably in order to enhance people’s capabilities and to compensate restricted work capacities through, for example, technical assistance, carefully targeted in-work benefits or wage cost subsidies (making the market fit for workers).
4. Research suggests the increasing importance of transversal skills,which means skills that cross the borders of disciplines or occupations and emphasise (not necessarily ‘higher’ but ‘new’) skills like abilities of communication, learning and problem solving, as well as languages and competences in information and communication technologies.
5. Finally, only the good governance of skills (including workplace democracy, negotiated flexicurity, and fair risk sharing of skill investments) ensures the mutual enforcement of skill evolution and job creation under conditions of increasing economic uncertainty.

This report, based on an extensive review of 17 research projects⁵ financed by the Research and Innovation Directorate-General under the sixth and seventh framework programmes, accompanies the Europe 2020 flagship initiative ‘An agenda for new skills and jobs’ from a scientific point of view. These 17 projects have investigated the determinants of skill formation and job creation designed to promote economic and social cohesion, as well as the specific objectives of the Europe 2020⁶ strategy for EU Member States (MS). The report presents the main findings from their final reports, working papers and policy briefs, as well as from books and academic articles from the projects themselves. In addition it draws on related work from other institutions (especially the European Centre for the Development of Vocational Training (Cedefop), the European Foundation for the Improvement of Living and Working Conditions (Eurofound), the European Commission and the OECD) and academics in the area.

The report starts with a brief summary of the ‘flagship’ (Chapter 1) and structures the findings of the review around the four main priorities set out by this initiative:

• better-functioning labour markets (Chapter 2);
• a more skilled workforce (Chapter 3);
• better job quality and working conditions (Chapter 4), and;
• stronger policies to promote job creation and demand for labour (Chapter 5).

The final chapters are devoted to specific target groups that are far behind the full employment goal (Chapter 6) and to the role that Europe can or should take over to ensure that the agenda objectives are reached (Chapter 7).

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¹ EU Labour Market Fact Sheet, February 2012.
² European Commission (2010), ‘An agenda for new skills and jobs: A European contribution towards full employment’, COM(2010) 682 final. http://eur-lex.europa.eu/LexUriServ/LexUriServ. do?uri=COM:2010:0682:FIN:EN:PDF
³ Expert Group on New Skills for New Jobs (2010), p. 4.
⁴ Ibid.
⁵ See Annex 7.2 listing the projects and their website access. Occasionally, the report also refers to publications from TML.net (http://www.siswo.uva.nl/tlm) supported by the Research and Innovation DG under the fifth framework programme.
⁶ European Commission (2010), ‘Europe 2020 — A European strategy for smart, sustainable and inclusive growth’, COM(2010) 2020 final.

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