Understanding and measuring skill shortages in Europe
While there is a tendency to think that skills shortages and skills gaps will disappear over the medium to long term – and therefore do not require policy intervention – evidence suggests otherwise. These imbalances do not adjust quickly enough, at least from a policymaking perspective, with negative consequences for workers, firms, and the economy as a whole.
Since 2024, Fondazione Giacomo Brodolini has been coordinating the SkillsPULSE project: Skills – Predicting, Understanding, and Locating Shortages in Europe. Funded through Horizon Europe, the project aims to address gaps in the understanding of skills deficiencies across Europe.
Within this framework, FGB's Labour Market & Skills Research Unit, coordinated by Liga Baltina, has been working to provide a conceptual review of skills shortages and gaps, and to develop methods to measure their incidence and anticipate their future emergence – particularly in light of major economic transformations such as digitalisation. The project also includes the development of a methodology to identify the extent, causes, and implications of skills deficiencies in Europe, as well as a composite indicator to measure them.
Understanding skills shortages and gaps
In the European context, skills shortages arise when employers are unable to find candidates with the required competencies in the labour market, while skills gaps occur within the existing workforce when employees lack the abilities needed to perform their tasks effectively. Evidence from the SkillsPULSE project suggests that these imbalances are not short-term labour market frictions, but structural issues that can persist over time, ultimately weighing on productivity and economic growth. At the same time, ongoing digital and technological transformation intensifies pressure on labour markets, making it increasingly harder to anticipate and meet emerging skill needs. This is why investment in research and advanced skills intelligence is essential to better measure, locate and forecast skill shortages. The project strengthens Europe's capacity to monitor changing skills requirements by developing new indicators, datasets and methodologies to support more targeted education, training and labour market policies.
What the evidence shows
Early project findings indicate that skills shortages and gaps are widespread across Europe, although their intensity varies by sector and occupation. Initial deliverables highlight the lack of a fully shared definition of ‘skills shortage’, which hampers data comparability and limits coherence in policy responses. The evidence points to several key drivers behind these imbalances. These include accelerated technological change, an ageing workforce, education and training systems that do not always respond swiftly enough, and rising skill complexity across many jobs. The SkillsPULSE project also examines how new occupations and emerging skills develop over time and how they can be integrated into existing classifications and frameworks, reducing the information lag that currently fuels persistent mismatches.
Impacts and policy challenges
Skills shortages generate cascading effects: employers face recruitment difficulties, unfilled vacancies and constraints on productivity and innovation. For workers, changing job requirements can make career transitions more difficult and increase the risk of skills becoming outdated. In the broader economic context, they may also contribute to widening regional and social inequalities, particularly where access to training and reskilling opportunities is limited. In the context of digital and green transitions, strengthening upskilling and reskilling systems is therefore key to ensuring that Europe can meet future skill demands. Evidence suggests that skills mismatches do not automatically correct themselves. Shortages and gaps can persist over time due to slow adjustments in education and training systems and the rapid pace of technological and structural change in the labour market. Addressing them requires coordinated policy action. Key measures include strengthening links between education providers and employers, promoting flexible lifelong learning and reskilling pathways, improving the collection of skills intelligence and designing evidence-based active labour market policies. The SkillsPULSE project contributes by developing new data sources and indicators that help decision-makers anticipate where and when shortages will emerge, enabling earlier, more effective interventions.
A new indicator for anticipating skills needs
The project is developing a composite index to measure the likelihood and intensity of shortages across sectors, occupations and countries. The index will combine traditional data sources, such as labour market surveys, with online job vacancy datasets. The methodology is designed to estimate not only the current incidence of shortages, but also their potential future evolution by incorporating economic, demographic, and technological trends. The index will be integrated into a software tool for policymakers and skills-intelligence authorities, enabling cross-country comparisons and regularly updated monitoring of emerging shortages.
Advanced indicators like the planned composite indicator measuring skills deficiencies can help shift from reactive to more predictive skills and labour market policies. By improving the quality and timeliness of skills intelligence, these tools can make upskilling and reskilling systems more efficient and help policymakers respond faster to technological, demographic, and economic changes. They can also support better coordination across countries, contributing to a more resilient, inclusive, and dynamic European labour market and strengthening competitiveness in areas such as digital technologies, artificial intelligence, and the green transition.
