Fixing the EU’s digital skills gap

In a speech given last year, Ursula von der Leyen, President of the European Commission, announced that 2023 would be the European Year of Skills, which officially began on May 9. Many new EU initiatives have been launched, including a Cyber Skills Academy to train the 500,000 cyber professionals Europe currently needs but does not have, plus several net-zero industry academies to train people on clean-tech developed in Europe.

Any country that hopes to thrive in the digital world must educate its people in a way that produces a digitally skilled workforce. Finland, for instance, has provided digital skills training at different educational levels, putting it near the top of the European Commissions Digital Economy and Society Index (DESI). Half of all Finnish enterprises use cloud services, and 19% use big data; in Germany, by comparison, the respective numbers are 12% and 15%. The high level of digital skill has made Finland fertile ground for entrepreneurship: each year, Finnish tech start-ups receive private equity investment equivalent to 1% of the country's GDP three times the level in Germany.

Measuring the gap

Despite these and other successful cases and although the EU has laid out a vision for digital transformation by 2030 skill gaps remain. The DESI shows that every third person working in Europe lacks basic digital skills, while the European Investment Bank (the EU’s lending arm) says a lack of skills is the region's most significant barrier to investment.

To better understand the digital skills gap, EY and All Digital teamed up with Huawei to investigate this phenomenon. Published in April 2022, their report aims to highlight key components of the EU's digital skills gap and identify areas where government and private industry can narrow it in the coming decade.

Mismatches vs. shortages

In the EY report, skill gaps are understood to be a combination of skill mismatches and skill shortages. A mismatch is an imbalance between the supply of and demand for different skills, even in a highly qualified workforce. For example, a country might have a large number of workers who are skilled in manufacturing technology, but lack the workers needed for a services-based economy.

Skill shortages, on the other hand, refer to a lack of qualified professionals. Shortages are easy to measure by looking at unfilled vacancies. And skill shortages can lead to skill mismatches if employers hire underqualified (or unqualified) candidates because no skilled applicants are available.

This seems to be the situation facing the EU at the moment. In a 2014 letter to EU education ministers, former Commissioner Androulla Vassiliou predicted that, unless the EU taught children basic coding in school, the EU could face a skills shortage of up to 900,000 ICT professionals by 2020. The EY analysis concluded that, although the skill shortage was considerably less than predicted (353,592), the mismatch was much larger (1.4 million). This suggests, the report's authors conclude, “that much of the shortage in ICT professionals has been addressed through the hiring of underqualified ICT specialists."

Using EU data on digital skills proficiency levels for ICT professionals, the authors reach the remarkable conclusion that in 2019, 18% of employed ICT professionals across the EU (about 1.4 million people) had low overall digital skills. Perhaps even more surprisingly, the analysis found that, during that same period, 15% of “manual workers” possessed above-average digital skills. These include skilled agricultural, forestry and fishery workers; field crop and vegetable growers; craft-related trade workers such as bricklayers; plant and machine operators; and domestic helpers. The report estimates that the EU has about 9.6 million digitally overqualified laborers.

Combine that stunning mismatch with the estimated digital skills shortage of more than 353,000 people, and you find that the 27 EU member countries suffered from a collective digital skills gap of approximately 1.8 million ICT experts in 2019. This gap reflects both missing talent and underqualified ICT specialists. The mismatch in "needed vs. available skills” accounted for almost 80% of the gap.

The report concludes that, although the EU needs more ICT professionals, it faces an even more urgent need to upskill its currently employed ICT professionals and other personnel across much of the occupational spectrum.

Table 1 – Key indicators on digital skills in the EU vis-à-vis third countries

The EY report provides a detailed analysis of measures that can be taken to narrow the EU’s digital skills gap. But at a high level, several immediate steps suggest themselves.

First, enterprises should maintain programs to reskill and upskill their people. While companies instinctively understand the need for skilled talent, many lack an upskilling strategy. Yet it is crucial to remain aware of how skills evolve, as well as what skills are available (or not) in the labor market. Digital competence training in particular can enhance employees employability and foster their professional advancement.

Second, and more specifically, women should be encouraged to choose careers in ICT and supported when they do. In most countries, they have difficulty training, attracting, and developing the ICT talent they need. Women represent an untapped talent pool. By creating the right conditions, industry can reduce the need for digitally skilled workers while reducing the gender imbalance in the labor market.

Governments can also invest more in digitalizing public services. The general population needs a basic level of digital skills in order to access such services, so their widespread adoption encourages upskilling in the general population.

Talent development is a responsibility shared by every country, business, and university. As a region representing more than 15% of the global economy, the EU bears a considerable share of that responsibility.

The extent to which the digital skills gap affects the competitiveness and development of companies, countries, and regions is still difficult to measure accurately. But the EY report makes clear that both government and private industry have leading roles to play in shaping the current and future ecosystem. By redoubling its commitment to growing digital skill levels in its current and future workforce, the EU can reinforce its capacity to address the digital skills gap, improve competitiveness, and reach its strategic objectives for the next decade.