By Gerard Walker, Future Jobs-Skills-Work Insights
Labour and skill shortages
Over the last decade, labour and skills shortages have increased across EU countries. These shortages are being driven by skills demand linked to technological change, the transition to a low-carbon economy, and demographic trends reducing the working-age population (although for Ireland, this remained positive due to the effect of immigration). There are also challenges arising from labour shortages due to poor working conditions in some sectors and locations. In Ireland's case, the labour market has also tightened, with employment at a high of 2,704,200 and unemployment low at 4.1% in June 2024.
The EU Eurobarometer survey of skill shortages, retention, and recruitment strategies of SMEs across Europe provides valuable insights for learning and development professionals. SMEs are defined as companies employing under 249 employees, accounting for 70% of persons employed in Ireland. This article examines the survey's findings for Irish SMEs and relevant policy developments at the EU level.
Nature of Irish SMEs skills shortages
Some 90% of Irish SMEs said it was very important for their business model to have workers with the right skills. However, 64% said it was generally difficult to find workers with the right skills (compared to the 78% EU average), either because the applicant lacked the proper skills or due to a shortage of applicants. Skill shortages were highest for professional and technical roles, craft and skilled trade workers, and managers. Half of Irish SMEs found it challenging to retain skills, similar to the EU average. Sweden emerged as the best in EU.
Importance of types of skills for Irish SMEs
Two-thirds of Irish SMEs said skill shortages held them back in their general business activities, including adopting and using digital technologies and “greening” business activities. The types of skills becoming more important were Digital skills required for adopting/using digital technologies -77%. (the highest response in the EU); Soft skills (flexibility, teamwork, communications, critical thinking) - 71%; Hard skills (technical or engineering) - 49%; and Green skills for “greening” business activities - 45%. Irish SMEs place a high value on educational qualifications such as degrees, diplomas, and certificates when recruiting.
Irish SMEs recruitment and retention strategies
Irish SMEs apply a broad set of measures when facing the challenge of skills shortages. The largest share (50%) makes better use of talent within the company and invests more in training (49%). Thirty percent collaborate with organisations in education or employment or with sectoral bodies to deal with skills shortages. Twenty-two percent increased job attractiveness regarding financial or non-financial benefits. Eighteen percent invested more in candidate searches, while 16% adjusted (or lowered) hiring standards. Finally, 17% of Irish SMEs changed work processes (including through automation and outsourcing). Only 2% of Irish SMEs abandoned the activity facing skills shortages, lower than the EU average (10%), indicating their resilience in finding workaround solutions to skill shortage challenges.
Challenges concerning employee training
Half of Irish SMEs said finding time for their staff to participate in training was difficult. One-third said it was challenging to identify appropriate training opportunities for their staff. 30% had difficulty financing staff training, while 23% had difficulty assessing staff training needs. Denmark, Germany, Finland, and Sweden were the best performers in the EU on these indicators, although Ireland was above the EU average.
To make it easier to recruit staff with the right skills, Irish SMEs said that they would benefit from better collaboration with public employment services, better tools for assessing their company skill needs and for assessing the skills of job applicants.
Satisfaction of Support given to Irish SMEs to tackle skill challenges
50% of Irish SMEs considered that national, regional or local organisations are making a fair effort to support SMEs in tackling skill challenges – the most positive response in the EU. SMEs saying that EU-level organisations are making a fair effort was also highest in Ireland at 30%. At the same time, SME awareness of EU funding programmes for skills, such as the European Social Fund or Erasmus+, was low at 19% of SMEs.
EU Action plan to tackle labour and skills shortages
The EU Commission has presented an action plan to tackle labour and skills shortages in cooperation with national governments and social partners. The action plan is a key deliverable of the European Year of Skills. It builds on several policy and funding measures at the EU level, including the €65 billion in EU funds available to invest in skills programmes. The plan sets out a series of actions, including supporting skills development, training and education; improving skills intelligence; supporting the activation of underrepresented people in the job market; promoting older workers employment, and improving working conditions in certain sectors.
Main Takeaways
Skilled workers are essential to the success of small and medium-sized enterprises in Ireland. Key measures to address skill shortages include increasing participation in lifelong learning and incentivising and enabling enterprises to make the best use of their workers' skills. Investing in the right skills development improves workers' employability and enterprise productivity and competitiveness. This is a key aspect of the work of Ireland's new National Skills Council.
Sources:
https://ec.europa.eu/social/main.jsp?langId=en&catId=89&furtherNews=yes&newsId=10790
https://europa.eu/eurobarometer/surveys/detail/2994