Can Europe benefit from tighter labor markets to accelerate reskilling and rotation—and thus technology adoption?

A critical ingredient in hastening technology adoption and the net-zero transition is the rapid reskilling and redeployment of workers as the economy evolves. Some 18 million workers will need to move into new roles as part of the net-zero transition alone. Automation and other technology trends are poised to create even bigger shifts in roles and work activities—and these shifts need to occur for Europe to realize the full productivity-enhancing potential of new technologies.

As labor markets are tight and unemployment is low in most regions, could now be the time for Europe to activate the “flexicurity” concept outlined by the European Commission? Flexicurity protects workers rather than jobs in order to hasten rather than delay these transitions. The challenge for policy makers would be to ensure that the security of employees is preserved even while flexibility increases.

Beyond reskilling, developing and attracting top talent remains critical, particularly in cutting-edge fields such as AI. Could Europe’s decision makers also consider expanding free trade to “free talent movement agreements” with other regions, or tax incentives for immigrating as well as returning talent?

Corporate players can collaborate with educational institutions and policy makers on reskilling programs and the creation of new career pathways, focusing in particular on mid-career workers who need to or want to prepare for new lines of work. For instance, more than 20 automotive companies, including Renault and Volkswagen, have collaborated on a “pact for skills” that aims to help more than 700,000 automotive workers add the skills they need for opportunities in the green transition and innovation. The overall joint commitment is expected to amount to €7 billion. Companies could also help forge a new deal for education—independently or in collaboration with universities—to cultivate the talent of the future, broadening access for students from diverse backgrounds. An example of this approach is France’s Ecole 42, which offers free, teacherless peer-to-peer learning; it welcomes students of all backgrounds without prerequisite qualifications.

More information here: Accelerating European economic competitiveness | McKinsey