The European Union (EU) was enjoying its highest labour participation rate since 2000 when COVID-19 hit. The economic impact has yet to be fully calculated but will surely be felt for years to come. The pandemic has also highlighted a critical and growing shortage of workers, and the region faces particular challenges with respect to digital transformation as well. To combat the workforce issues in the EU, training and skills development will be essential.
Historically, digitalisation has been slower in the EU than in the U.S. A report issued earlier this year by the European Investment Bank found that across industries, many European firms lag behind their U.S. counterparts in terms of digitalisation. Only 66% of manufacturing firms in the EU, for instance, report having adopted at least one digital technology. That’s compared to 78% of U.S. firms. In the construction industry, the difference is 40% in the EU to 60% of U.S. firms. This represents a competitive disadvantage for European companies.
As we move further into the second half of 2020 and beyond, the lessons learned from the ongoing pandemic will play a significant role in digital transformation efforts. The human side of things will be a major factor as organisations look to innovate processes and new ways of working, taking two major, underlying factors into account: the skills shortage and the ubiquity of remote work.
In its report, The Future of Work in Europe, McKinsey & Company predict that addressing skills shortages will be a major concern for European organisations despite their growing adoption of automation. A key reason for this concern is the declining supply of labour – the working-age population of Europe is expected to shrink by 13.5 million people (or four percent) by 2030 due to aging.
Organisations will need to look to more adoption of automation to address the shortage of needed labour. McKinsey forecasts, based on the pace of automation adoption, that 22% of work activities could be automated in the next 10 years. Yet that will still not be enough to quell the workforce deficit. As many as 21 million people in declining occupations will need to change careers, yet this is the demographic that lacks the higher education necessary for that transition. Employers should assess their workforces now and create strategies to accommodate these lower-skilled workers with opportunities to upskill and reskill.
The age of remote work ushered in by the pandemic will also continue to see growth, and organisations will need to take this shift into account. Technology that makes collaboration and communication easier and less constrained by physical locations is – and will continue to be— a huge part of this shift’s success. Proper training on these technologies will enable remote employees to remain productive and connected to their teams.
Compliance also will remain important, especially in light of regulations like GDPR. Effective compliance training among employees leads to a secure organisation that’s aligned with government regulations.
One of the most significant challenges when it comes to new technology and successful adoption has to do with behaviour. You have to provide incentives for employees to embrace new technology or tools, but you also need to ensure you’re investing in the right education.
According to McKinsey, effective training programs, better matching of aptitudes to job roles and transition support will all be crucial in helping individuals chart new career trajectories. However, these activities can and should also be applied to existing employees. Though each country’s specifics are different, all are in need of strategies to help educate the workforce they need now and will need even more within the next decade.
Though the education sector has a role to play, skills requirements change too rapidly for most educational institutions to keep up. The workplace is the natural venue for employees to receive training and acquire new skills and knowledge. Continuous learning has, therefore, become critical to the success of every organisation. However, the current impossibility of group training sessions or face-to-face training adds a layer of complexity to corporate training strategy.
With the right set of learning management tools, organisations can enable employees to find, take and keep track of training from one central platform. This provides flexible access to training, regardless of an employee’s time zone or geographic location. And because all employees will be sharing the same platform, they can collaborate and help each other throughout the learning process.
Organisations in the EU must act decisively and quickly to ensure that they have the workforce they need, both for the remainder of 2020 and in light of the shortage to come by 2030. This requires both a vigorous digitalisation effort and an emphasis on reskilling and upskilling of employees. Corporate learning should no longer be seen as an end point but a continuous process.
For greater efficiency, it should be centralised in one place with anywhere, anytime access. Automation will help but will not be sufficient in itself to overcome the talent shortfall. Use the recommendations noted above to forge a strategy that ensures remote workers have the tools to succeed and that employers have the workers they need, as well.