Europe’s skilling dividend: Turning talent into growth

Europe’s labor market is at an inflection point. While governments and employers across the continent are investing in education and reskilling, the gap between workforce capabilities and labor market demand continues to widen.

The number of unfilled roles is rising as many workers remain either underqualified or overqualified for available positions. According to a recent European jobs survey,¹European Skills and Jobs Survey (ESJS), Cedefop, accessed May 1, 2026. a third of European employees are experiencing this mismatch between qualifications and open jobs, and nearly half believe their skills could be better deployed. This comes as automation trends suggest that more than 25 percent of work hours in Europe could be automated by 2030, requiring up to 12 million occupational transitions.

At the same time, Europe is not simply facing job displacement from automation; it is also struggling to fill many of the jobs and skill profiles that will shape future competitiveness. Demand continues to outpace supply for AI and machine learning specialists, cybersecurity professionals, software developers, renewable-energy engineers, and other digital and green-transition roles.

Increasingly, employers also face shortages of hybrid profiles that combine domain expertise with digital fluency, systems thinking, workflow design, problem-solving, and the ability to lead teams through change. Europe therefore faces a dual mandate: helping workers transition out of automatable work while accelerating their movement into high-demand roles, where talent shortages are already constraining growth and innovation.

This labor market flux, while challenging, represents one of Europe’s greatest opportunities for competitiveness: converting an educated but underutilized workforce into an engine of innovation and productivity. McKinsey research shows that strengthening Europe’s competitiveness could create €500 billion to €1 trillion in additional value annually by 2030.

For years, Europe’s reskilling agenda has focused on increasing the supply of training through more courses, certifications, and curricula. While training is important, workers must be able to translate their new skills into jobs. Europe’s challenge is not a shortage of learning but of “skills liquidity”: the ability of talent, skills, and opportunity to move fluidly across roles, regions, and sectors. Creating that liquidity is essential to transforming training investment into real economic outcomes. This imperative will only grow as AI use disrupts jobs.

Employers, governments, educators, and technology platforms each have a distinct role to play in creating a labor market where skills move fluidly toward demand. By linking credential systems, digital platforms, and employer demand, Europe can begin to reduce the mobility friction that currently traps labor potential. Europe already has some of this infrastructure in place, but achieving skills liquidity at scale will require more coordination across business, government, and education systems. The goal is to align incentives, data, and decision-making so that learning translates into opportunity.

In this article, we discuss how employers can help create this talent ecosystem by making skills more visible to their employees and other organizations and by getting better at measuring people data to understand where work is flowing.

Many countries, one workforce opportunity

The fact that educated, motivated workers often lack the infrastructure to move efficiently to where labor demand is rising is a problem across Europe. Nations face the same need to align learning with mobility to address three megatrends affecting the future of jobs, including the green transition, tech-driven transformation, and regional labor factors (Table 1).

The friction between learning and opportunity is playing out in several ways:

• Established labor markets are slow to adapt to current job needs. In Germany, the dual vocational system remains excellent for early careers, but it can limit lateral moves later in life. Germany’s public sector alone faces a shortage of more than 100,000 data-skilled workers, our analysis shows. France contends with similar rigidity, along with regional imbalance, as innovation jobs cluster in Paris while regional labor markets lag behind. This gap highlights the need for adaptive reskilling policies at the local level.

• Job-matching infrastructure is limited. In some countries, the constraint is not education quality but mobility and job-matching infrastructure. In Spain, the youth unemployment rate is among Europe’s highest, at nearly 24 percent, according to recent Eurostat data, while nearly one in three employers reports unfilled vacancies because of skill shortages. Limited credential recognition and weak matching systems constrain movement between regions.

  Italy faces similar obstacles, with low tertiary attainment and pronounced brain waste (the widespread languishing in low-productivity jobs), particularly in the south. Portugal, by contrast, combines high job mismatch (around 41 percent) with flexible credential recognition and open migration across Europe, making it a test case for cross-border reskilling ecosystems.

• Cross-sectoral mobility is lacking. In Northern Europe, the challenge is less about scarcity and more about spurring mobility across sectors. In the United Kingdom, job postings requiring AI skills grew 21 percent from 2018 to 2023, while degree requirements fell 15 percent.²Matthew Bone, Eugenia González Ehlinger, and Fabian Stephany, “Skills or degree? The rise of skill-based hiring for AI and green jobs,” Technological Forecasting and Social Change, May 2025, Volume 214, Number 124042. This signals a shift toward skill-based hiring, underscoring the need for modular, nondegree pathways such as boot camps, apprenticeships, and microcredentials (short, focused certifications that verify specific skills). Sweden’s digital infrastructure and relatively high social trust enable rapid innovation, yet specialization silos—workers trained in narrow fields that don’t transfer easily to other roles or regions—and migrant overqualification still limit cross-sector mobility.

These patterns indicate that Europe’s reskilling problem is primarily one of mobility friction: the inability of people to find the right jobs in the right sectors where demand exists. This is the missing link between training and opportunity.

Building on Europe’s structural advantage

Europe’s diversity of languages, institutions, and regulatory systems can be seen as a barrier to integration. Yet the European Union already possesses the governance structures and shared standards needed to orchestrate systemic reskilling—if these systems are connected and scaled.³We discuss data from European Union members and from individual countries outside of the European Union, including the United Kingdom.

Key programs include the following:

• ESCO (European Skills, Competences, Qualifications, and Occupations)⁴“What is ESCO?,” European Commission, updated October 12, 2025. is a European Commission multilingual taxonomy linking skills and occupations to support job mobility and a more integrated labor market across Europe.
• Cedefop, which supports vocational education and training in Europe, offers forecasting tools, including Skills-OVATE, that generate real-time labor market information based on online job advertisements.
• The Pact for Skills aligns public and private organizations around adult upskilling and reskilling, creating a framework for collaboration rather than duplication.

European organizations, both public and private, can use these and other tools to build skills liquidity in three areas:

• Cross-border data interoperability. Credentials, learning histories, and job records can be portable, machine-readable, and trusted across national systems. Shared taxonomies can improve the visibility of transferable skills.
• Real-time AI-enabled matching. Algorithms can map adjacent roles, personalize learning paths, and forecast emerging demand, helping individuals and employers make data-driven transitions.
• Outcome-based incentives. Funding models that reward verified job placements or redeployments, rather than course completions, can better align incentives across public agencies, providers, and employers.

In practice, this ecosystem approach reframes reskilling from a delivery problem to a systems challenge. It asks not only what people should learn but also how skills can move. By turning bureaucracy into connective tissue, the continent can create a truly pan-European talent market where skills flow more efficiently.

Creating a skills liquidity ecosystem

The true test of building an effective European skills ecosystem involves increasing trust among stakeholders through transparency, program codesign, and measurable impact (Table 2).

Organizations must be able to turn abstract frameworks into real mobility pathways. Consider two scenarios facing a customer service agent in Italy. In the first, she completes an online course that helps her build AI skills. But she finds no local employer seeking those skills, and her new qualification becomes just another entry on her résumé. In the second scenario, she joins a platform that maps her existing skills, identifies adjacent roles such as “AI-enabled customer insight associate,” recommends targeted microlearning, and connects her directly to employers in her region or beyond. In this case, reskilling produces employment, not just a certificate.

This second scenario is already taking shape through company-driven initiatives such as the New Career Network (NCN), launched under the European Round Table for Industry’s Reskilling 4 Employment initiative. The NCN acts as an AI-powered mobility platform that brings together job seekers, employers, and training providers into one reskilling ecosystem.

In Portugal, Sonae leads the NCN pilot, aligning specialized courses with employer demand and reducing time to hire. In Spain, Fundación Telefónica operates the platform through tailored course pathways and direct links to employers. Together, these pilots have already reached more than 25,000 individuals, demonstrating that integrated guidance and matching can dramatically accelerate skill transitions.

NCN’s strength lies in integration: mapping how skills overlap across roles and translating those similarities into personalized learning and hiring pathways. For example, roughly 60 percent of a logistics coordinator’s skills align with those of a supply chain analyst, allowing for faster placement, lower recruitment costs, and higher learner engagement—all key ingredients of a functioning skills ecosystem.

Similar efforts are emerging elsewhere in Europe: regional learning hubs in Germany, digital skills passports in the Netherlands, and cross-industry competence mapping in Finland. Yet NCN illustrates what success looks like when placement, credentialing, and matching operate on a single, interoperable platform.

To make skill information public, it is imperative that organizations move from broad labels to specific, outcome-linked skill standards. They can share structured, anonymized demand signals about the specific skills, proficiency levels, tools, certifications, and work contexts they need.

For example, instead of signaling demand for welders, employers can specify the type of welding process, materials, safety requirements, equipment familiarity, quality standards, industry context, and expected proficiency level. This turns a generic occupational label into a usable skills specification. The data shared can include priority occupations and adjacent roles, required technical and foundational skills, accepted credentials or assessment evidence, and placement outcomes from previous training pathways.

Employers can share this data, which would be aggregated and anonymized, through trusted intermediaries, including platforms such as the NCN and the existing European jobs programs discussed above. They can also widen the scope to other intermediaries, including sector councils, chambers of commerce, employer coalitions, public employment agencies, regional skills bodies, and training consortia.

For training providers, the public signal is meaningful only if it is specific enough to inform curricula design and credible enough to justify investment. That means demand data should be tied to real employer commitments: interviews, apprenticeships, guaranteed assessment pathways, preferred-provider partnerships, placement targets, or outcome-based funding. Otherwise, training providers risk building courses for abstract demand rather than actual jobs.

Three actions for business leaders

By reducing multiple points of hiring friction, organizations can gain access to an even wider talent pool, fill roles faster, and improve retention. Leaders can focus on these areas:

• Review hiring and talent management practices. Go beyond dropping degree requirements by clearly defining the skills each role needs and assessing candidates against them. Show employees which other jobs they could realistically move into with their current skills—and what they would need to learn to get there. Making these pathways more visible helps people move across roles, build new capabilities, and fill in-demand jobs more quickly.
• Play an active role in the wider talent ecosystem. Share high-level, anonymized data on in-demand skills—enough to signal where talent is needed without revealing sensitive information—and partner with training providers to create short, targeted courses linked to real roles. Treat your company not just as a hiring destination but as a place where people build skills and move into new opportunities. In tight labor markets, this kind of collaboration helps expand the talent pool and makes it easier to fill critical roles.
• Treat talent as a dynamic system, not a static head count. Analyze how quickly employees build new skills and how often open roles are filled by reskilling existing staff. Track how long it takes to hire for new skill needs. And pay attention to whether people hired for their skills—rather than traditional credentials—stay and succeed over time. Research shows⁵Matthew Sigelman, Joseph B. Fuller, and Alex Martin, “Skills-based hiring: The long road from pronouncements to practice,” Burning Glass Institute, February 2024. that companies leading in skill-based hiring see higher retention among workers hired without degrees.

Skill-based hiring works only when three things are true: employers define skills clearly, candidates can prove those skills credibly, and hiring managers trust the evidence enough to act on it.

Making progress in these areas will help organizations build stronger internal talent pipelines, treat workforce capabilities as a source of competitive advantage, and connect more effectively to external talent markets. Beyond individual organizations, employers, governments, educators, and technology platforms each have a role to play in creating a European labor market where skills can move more easily to where they are needed.

Governments and agencies can act as system enablers by setting open standards, rewarding employment outcomes over course completion, and aligning public investment with real job transitions. Educators and training providers can offer modular, market-linked learning that evolves with demand. And technology platforms—both public and private—can provide trusted infrastructure that enables data portability, credential recognition, and real-time matching across borders.

In this challenging labor landscape, where limited mobility holds workers back, organizations that succeed will look beyond their own boundaries to connect job seekers, data, and institutions. Done well, this shift can help turn Europe’s fragmented learning systems into a more dynamic skills market, spurring productivity, opportunity, and growth.