From uncertainty over Brexit and changing regulations in France to a shortage of high-level skills in Germany and 15% unemployment rate in Spain, companies in the EMEA region are challenged to recruit, engage, and retain top talent. Here, we cover workforce trends in Europe, featuring a sampling of the macroeconomic issues, industry trends, and demands for skills across the region.
The following is an excerpt from Allegis Group’s latest research report, “Global Workforce Trends 2018.”
The U.K. unemployment rate hovered near four percent at the midpoint of 2018, close to record lows from the mid-1970s. Unlike the U.S., where a record low participation rate further reduced unemployment figures, in the U.K., the labor force participation rate rose to its all-time high in February 2018 at 79 percent. That is 16 percentage points higher than in the U.S., according to Eurostate data. Meanwhile, job vacancies remain at historic highs, but wage inflation has been mostly mild.
While overall employment growth has moderated, demand for talent remains strong. Meanwhile, the number of new workers into the talent supply is now half that of employment growth, leading to a significant shortage of workers.
From a skills standpoint, there is a healthy supply in certain areas but not across all fields. The U.K. has a strong supply of manager and director skills and average numbers of professionals, which makes it a good market for employers that require skilled talent, although competition is high. Service-based companies will also benefit from a healthy supply of administrative and clerical workers along with average numbers of sales and customer services workers.
Brexit remains the most significant factor in the U.K. labor supply landscape. It is not a certainty that jobs will leave the country, but many see it as a distinct possibility. Reduced immigration at a time when unemployment is low will affect industries dependent on that labor. In certain industries, such as finance and banking, IT, and others with a global scope, there is concern that companies will leave the U.K. in the future even as many companies are expanding their presence in the country today.
If Brexit causes an exodus of skilled jobs, the benefit may go to attractive countries such as Germany, the Nordics, the Netherlands, and Poland; however, these countries already have very low unemployment rates (meaning a tight talent supply) and labor-friendly policies that would increase costs and reduce flexibility in hiring for employers.
Download PDF: UK by the Numbers
While both high-skill and low-skill industries are expanding, France’s unemployment rate remains elevated, particularly among associate professionals and technicians. The unemployment rate for people with a college degree is around five percent. Unemployment is far lower for the professional industries, which can make talent acquisition difficult. This fact is particularly true with the loss of high-level skills in France as many college educated people move to Switzerland, the U.S., the U.K., and Canada.
The political and regulatory environment will continue to influence the French labor market. For example, new regulations brought about by Emmanuel Macron’s presidency have triggered a series of mass layoffs by large companies no longer responsible for having to prove financial hardship as a means of cutting workers. It is not clear whether this increase in the labor supply and loosening of regulations will be enough to attract companies to the area, as the strong influence of labor unions still presents obstacles for businesses.
Employment growth continues to exceed the number of new labor force entrants in France. Professional and technical services are driving the growth in employment along with IT and construction. Banking and finance, however, experienced softer demand through 2017.
Download PDF: France by the Numbers
Germany’s macroeconomic picture indicates continued pressure on the talent supply. The unemployment rate dipped below four percent for the first time since the early 1980s, despite a clear upward trend in their labor force participation rate. Job vacancies have soared to near record levels hit in the early 1970s, while labor costs maintain an upward trend. At the same time, real wage growth has been almost flat as the Consumer Price Index had a particularly sharp increase in 2017 compared to recent years. In short, wages are rising, but so is the cost of living, leaving the real gain for the worker relatively flat.
Outside of banking and finance, every industry in Germany expanded throughout 2017. Given that Germany’s labor pool continues to expand while unemployment drops, available workers are being employed at rapid rates. At the same time, some of the fastest growing industries are not high wage producers, which may explain why overall real wage growth is muted.
The demand for skills in Germany extends across several fields. Engineering leads the way and includes mechanical and automotive engineering professions, mechatronics, energy and electronics professions, metal and welding engineering, technical research and development, technical drawing, construction, and model-making. In the IT sector, there is a high demand for developers, programmers, and consultants. Other high-demand areas include nurses and doctors, energy and technology specialists, and skilled workers in the hotel or restaurant sector.
Download PDF: Germany by the Numbers
The market for talent in the Netherlands is mixed. Growth in key industries has been varied, with professional and technical services driving employment growth while IT and banking and finance both declined on the year. Overall, labor force growth lags employment. As a result, unemployment continues to fall, leading to less availability of talent.
The Netherlands has above-average numbers of professionals, administrative, and customer service and sales workers. Meanwhile, there are only average numbers of managers and associate professionals. High demand in any skilled industry could lead to unpredictable difficulties acquiring talent.
Download PDF: The Netherlands by the Numbers
Declining labor force numbers and growth in skilled industries make Norway a competitive market for acquiring talent. Employment saw a relatively small increase in 2017, while the number of new labor force entrants fell over the same period, causing a significant fall in unemployment.
Skilled industry growth is mixed. Banking and finance, and IT saw substantial increases in employment, but professional and technical services and administration remained flat. On the supply side, Norway has adequate numbers of managers and professionals, as well as sales/customer services workers. The supply of associate professionals and administrative and clerical workers is average to soft, which could cause some recruiting challenges in those fields.
Download PDF: Norway by the Numbers
Unemployment is high in Spain at roughly 15 percent, but the availability of many critical skills remains low. Manufacturing is the most significant driver of growth, with IT and professional and technical services also making large gains while banking and finance saw a slight fall in the 2017 timeframe. Spain has below-average numbers of managers, professionals, and associate professionals. The market does have substantial numbers of administrative, clerical, and customer services and sales workers, along with a healthy supply of skilled trade workers and plant operatives. Employers seeking skilled talent may experience some sourcing difficulties due to a shortage of skilled workers.
Download PDF: Spain by the Numbers
Is your organization ready to gain a strategic perspective into the economic, demographic, and global employment trends infusing the supply of talent? Your free copy of Allegis Group’s Global Workforce Trends Report is ready for immediate download today.