Unlocking Europe’s Tech Potential: Why Skills – And Women – Are Key

Main takeaways

1. With 85% of EU firms struggling to find skilled workers, and only 4.2% of graduates holding ICT degrees, European policymakers must urgently address the skills gap 
2. Women represent just 19% of EU tech specialists today, so increasing female participation in the digital sector will be crucial in plugging Europe’s skills gap 

In today’s rapidly evolving economy, the European Union faces a pressing challenge: a significant shortage of skilled human capital. This issue is particularly pronounced in the tech sector, where digital firms struggle to find the talent they need to innovate in Europe. 

Despite efforts to address these shortages at the EU level in the last decade, evidence indicates that the funds allocated to education and training have not yet effectively improved the digital skills of Europe’s workforce on the ground. 

Regardless of the boldness that the new European Commission might choose to display in fields like regulatory simplification and tech funding, without access to a skilled labour force, the EU will simply never be able to counteract its dwindling digital competitiveness. 

In order to make this challenge more tangible, J. Scott Marcus and Maria Alessandra Rossi’s study Strengthening EU Digital Competitiveness explains the impact the skills shortage is having on tech innovation in the EU and offers several key actions to rectify the issue. 

1. How the lack of skilled labour is stifling innovation

While the EU boasts substantial research capabilities and has produced some leading technology firms, its progress pales in comparison to other global competitors, notably the United States and China. This challenge is particularly acute in emerging and specialised technologies, such as artificial intelligence (AI), blockchain, connectivity, and quantum computing, as Marcus and Rossi point out. 

In 2022, the US employed about 42% of the world’s top-tier AI researchers, while China also employed a significant share. In contrast, Europe employed only 12% of them. 

The Draghi report emphasises that if the EU wants to compete with international players, it must fundamentally change its approach to skills development. Yet, research from the European Investment Bank reveals that 85% of firms in the EU are still concerned about their lack of access to individuals with the necessary skill sets. 

This means that the European Commission and Parliament must rethink how to improve access to skills within the Single Market, if Europe aims to become a world leader in digital innovation. Furthermore, it is crucial that the Commission’s Executive Vice-President for Social Rights and Skills, Quality Jobs and Preparedness, Roxana Minzatu, follows through on her commitments to enhance ongoing work in digital education and training. 

2. Why an overhaul of education policies is needed

While the EU produces high-quality talent in the fields of science, technology, engineering, and mathematics (STEM), the number of graduates in these fields remains far too limited. Although the proportion of Europeans obtaining a higher education has increased by 10% over the past decade, only 4.2% of new graduates hold an ICT degree. More than ever, it is clear that the EU’s approach to ICT and STEM education requires a major overhaul. 

As noted by Mario Draghi, current education and training systems are failing to prepare workers for the digital skills required. Marcus and Rossi also underscore this point, arguing that the EU’s education system needs significant reform. One recommendation is to ensure structured dialogue with both private and educational stakeholders, aligning educational measures with the skills needed to scale up innovation in the EU. 

The European Pact for Skills could serve as an ideal roadmap, supporting collaboration between public and private actors in the area of reskilling. With the Council currently negotiating the EU’s next Framework Programme for Research and Innovation (FP10), now is an opportune moment to refine the EU’s approach to education and innovation, closing the widening skills gap in the tech sector. 

3. Why we need to increase female participation

Closing Europe’s massive skills gap is not only a question of promoting specific degrees or fields of study. In order to effectively address the shortage in digital skills, Europe must also promote the participation of female workers in the tech sector. Recent statistics from the Commission indicate that less than 19% of ICT specialists in Europe’s workforce are women right now. Addressing this gap is likely to be a gradual process, as women currently also only account for about 25% of ICT students in the EU. 

Marcus and Rossi found that having more women in the tech sector would have a disproportionately positive effect on the productivity levels of EU Member States. As they note, “gender inclusion also seems to have favourable effects on the value of companies whose strategies depend on innovation, including high-tech manufacturing and knowledge-intensive services.” Expanding female participation fosters a broader range of perspectives and solutions, which is essential in industries that rely heavily on innovation. 

One significant benefit of more gender diversity in the workforce is that it leads to the creation of products and services that better address the needs of society as a whole. For example, in the healthcare sector, women’s insights are known to have led to innovations that address health concerns specific to women, children, and the elderly, which previously were overlooked when the workforce was still predominantly male-led. Thus, closing the gender gap in the tech sector must be a top priority. 

Conclusion

Europe stands at a crossroads in its quest for digital innovation, grappling with a significant skills shortage. To unlock the tech sector’s full potential, the EU must fundamentally rethink its approach to skills development. This includes a comprehensive overhaul of ICT education that aligns better with market needs and fosters collaboration between educational institutions and the private sector. 

Furthermore, increasing the participation of women in the digital sector is essential. With women making up only a small fraction of the tech workforce today, promoting their involvement will not only enhance diversity but also drive productivity and innovation.