European CEOs are grappling with an array of challenges, including a period of slower economic growth and persistently tight labor markets. According to the latest available data, all EU countries reported labor shortages that are likely to persist for the foreseeable future.1 In this landscape, addressing talent gaps is critical to pursuing growth. Many companies also aspire for this goal to be achieved in an inclusive way, boosting disposable income and socioeconomic empowerment of disadvantaged communities and improving social cohesion.
McKinsey research on ethnocultural minority inclusion in the workplace in continental Europe suggests this population represents a valuable opportunity for companies to grow inclusively. Why has this talent pool been overlooked? A key factor is limited visibility into its potential. In our new research, we present a fact base that includes estimates of the ethnocultural minority population’s size and mix, educational attainment, and labor market outcomes. We include new data on experiences of ethnocultural minorities in the workplace and insights on how companies are approaching this issue and lay out the growth opportunity for organizations that pursue ethnocultural inclusion.
In this preview article to our full report, we examine the ethnocultural minority population and its educational attainment as a starting point to gain a better understanding of their full economic potential.
Europe has a large and diverse population of ethnocultural minorities
Our first set of insights stems from a pan-European view that seeks to address knowledge gaps about the size and mix of the ethnocultural minority population. Across 11 European countries, we estimate that ethnocultural minorities represent from 5 to almost 20 percent of the population, and these figures are likely an underestimate due to data constraints. The mix varies significantly between countries, reflecting differing historical contexts, countries of origin, and generation of migration (Exhibit 1).
Perhaps counterintuitively, the largest ethnocultural minority population across the 11 European countries analyzed is from Asia, representing one-third of its total—and the largest minority in countries such as Germany (38 percent) and Denmark (35 percent). More expectedly, more than half of ethnocultural minorities in France are from the Middle East and North Africa (MENA) region, and in Germany, the Turkish community is the second largest (26 percent). In a similar way, patterns of generation of migration of ethnocultural minorities vary—for example, two-thirds of the ethnocultural population in Denmark is first generation, compared with half in France.
Hiring more ethnocultural minorities could spur growth
Our research debunks the perception that ethnocultural minorities have lower levels of educational attainment compared with the rest of the population and that it is the principal barrier to their inclusion in the workplace. In fact, across Europe their tertiary education rates are in line with those of nonminorities, on average, even if the rates differ by country (Exhibit 2). In the Netherlands, for example, 31 percent of the estimated ethnocultural minority population has completed tertiary education or above, just three percentage points less than that of the nonminority population.
Yet despite similar levels of tertiary education, ethnocultural minorities are two-and-a-half to three times more likely to be unemployed than their nonminority peers. And once employed, ethnocultural minority workers are almost twice as likely to be overqualified for their role. These findings point to a potentially attractive opportunity for companies to tap into a pool of educated ethnocultural minority talent to address skills gaps.
Ethnocultural minority populations are also more likely than the nonminority population to have completed only lower secondary education or below. In some countries, the gaps are large—for example, ethnocultural minorities in Germany are almost four times more likely than nonminorities to have lower levels of educational attainment.
For employers, this dynamic presents opportunities at both ends of the educational attainment spectrum. On the one hand, employers could recruit from a larger-than-anticipated pool of tertiary-educated ethnocultural minorities to fill roles requiring higher skill levels (for example, medical practitioners and civil engineers in construction and transportation), provided they find ways to access and effectively onboard these workers and offer reskilling support where needed. On the other hand, ethnocultural minorities could also help to address labor shortages at lower occupational-skill levels across sectors experiencing talent shortfalls (such as in construction and transportation).2
Further insights from this research include new data on the challenges ethnocultural minority workers face in the workplace. For example, they are twice as likely to report missing out on advancement opportunities and two-and-a-half times as likely to report experiencing biased behaviors at work. And we round off this perspective with insights from companies across Europe as they begin to engage with this issue.
Our report, which builds on previous McKinsey research on inclusive growth and the benefits of diversity, focuses on the opportunity associated with hiring ethnocultural minorities and more effectively including them in the workplace so they reach their full potential. We explore the following questions:
- How big is the opportunity?
- What are the barriers for ethnocultural minorities to enter the workplace?
- Once employed, what is their experience?
- How are companies navigating the regulatory and cultural landscape in Europe in relation to ethnocultural minority inclusion?
- What actions can companies take to truly capture this opportunity?
The report will show that greater inclusion of ethnocultural minorities could represent a triple win—enable growth for companies, support the wider economy, and strengthen economic empowerment for individuals and their families.