This is the result of the crisis, followed by a modest recovery and average GDP growth rate in the EU of 2.0% a year. But there are big differences in the forecasts for employment growth in the different Member States. In Luxembourg, employment should grow by just over 1% a year between now and 2020. In contrast, in Germany, employment is expected to fall by 0.2% a year.
These data come from the baseline scenario of Cedefop’s latest skill supply and demand forecasts, which are now available online. The forecasts cover the period 2013 to 2025, but as the mid-point of Europe’s 2020 strategy, launched in 2010, approaches, this analysis uses the forecast data to consider whether the EU’s benchmarks for employment and educational attainment set out in the strategy, will be met by 2020.
Lower unemployment, but not enough employment
Labour demand will continue to be weak. Employment will grow by about 0.35% a year (Figure 1), creating around 2.8 million new jobs for those aged 20 to 64. On these trends the employment rate for this age group would be 68.5%, in 2020, well below the 75% target. For Europe to reach its 75% target, the employment rate needs to be increased by 6.5 percentage points, which requires creating 16 million new jobs between now and 2020. By comparison, during the more favourable pre-crisis economic conditions of 2000-08, the employment rate increased by 3.7 percentage points.
Meeting the 75% employment rate by 2020 with a shrinking labour force requires increasing participation in the labour market by about 4.3 percentage points. Even under good economic conditions this is not easy. After 2020, increasing demographic pressures will present unprecedented labour market challenges to Europe’s policy makers.
Unemployment will fall by 2020, but not only because people will find jobs. The labour force will also shrink. Worryingly, discouraged unemployed people may also become inactive and progressively socially marginalised.
Figure 1. European Union employment growth per annum, 2013-25 (%)
More than 90% of job opportunities between now and 2025 are forecast to be due to the need to replace people who will leave the labour market mainly to retire. For some occupations all job opportunities will depend on replacement demand (Figure 2).
Figure 2. Job opportunities 2013-25, employment growth and replacement needs by occupation (%)
Note: * Occupations are about to experience negative growth so all job openings will be due to the replacement needs
Most job opportunities will be in services, with fewer in the primary sector and utilities, but structural economic change is slowing down to fractions of a percent (Figure 3). An item of good news is that job losses in manufacturing will slow to around 0.25% in the next seven years.
Figure 3. Changes in sector employment share, EU, 2013-20 (%)
Divergent employment growth across the EU
Most Member States are expected to exceed the rather unspectacular European average employment growth of around 0.35% per annum during 2013-20. But the EU average masks large differences between countries (Figure 4). Countries have set national employment rate targets for those aged 20-64, to complement the European benchmark. Germany, despite its downward trend, along with Sweden, Malta, Austria, the Czech Republic, the UK and the Baltic states are expected to meet their national targets 2020. However, countries such as Greece, Spain, Bulgaria and Hungary are between 13-15 percentage points below their national employment rate targets. Of the Euro zone countries receiving financial support, Ireland, Greece and Spain are all forecast to have employment growth above the European average, but are unlikely to meet their national employment rate targets while Cyprus and Portugal are expected to continue to struggle.
Figure 4. Employment growth per annum in EU Member States, 2013-20 (%)
Trends towards high-skilled jobs continue and educational attainment is rising
Although the trend towards more highly skilled jobs is slowed down by lower economic growth, the forecast is that the share of jobs employing higher-educated labour will increase (Figure 5).
Figure 5. Proportion of job openings by qualification level, EU, 2013-20 (thousands)
Between now and 2020 (and beyond), the distribution of job opportunities will be uneven, opportunities being concentrated in higher and lower skill level jobs (Figure 6). At all skill levels, most newly created jobs will be characterised by non-routine tasks which are not easily replaced by technology or organisational change.
Figure 6. Job opportunities 2013-25, by occupation (%)
The EU is on course to surpass the educational attainment of 40% of 30-34 year olds having a tertiary level qualification and may even achieve 45% according to the forecast (Figure 7). However, fewer high-skilled jobs and higher levels of educational attainment increase the risk of skill mismatch through overqualification, especially as, at times of weak employment demand, people are more willing to accept jobs below their qualification level.
Figure 7. Proportion of 30-34 year olds with tertiary level education, EU, 2020, (%)
The forecast data point to the overall share of the labour force with no or low level qualifications as falling from 22% in 2013 to 16.8% in 2020. This indicates that the share of young people leaving school with low or no qualifications will fall.
2014 Cedefop’s skill forecast data are available on its website at: http://www.cedefop.europa.eu/EN/about-cedefop/projects/forecasting-skill-demand-and-supply/skills-forecasts.aspx
And the EU Skills Panorama at: http://skillspanorama.cedefop.europa.eu/