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Unemployment rates have been falling in Europe, but employment has not been increasing.
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Replacement needs will drive job opportunities over the next decade.
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Most job openings call for workers with advanced skills.
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Despite a large pool of job seekers, many employers are struggling to fill vacancies.
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The EU needs to develop more efficient training and recruitment processes.
Labour markets across the European Union continue to struggle. Despite a reviving economy and lower unemployment rates, the employment numbers haven't improved much. The EU’s unemployment rate fell to 10.6% in February from 10.7% in January, while the euro zone’s jobless rate fell to 11.9%, its lowest in more than a year, from 12% in the previous month. But wide discrepancies still exist between the EU's core and periphery: While the unemployment rate in Germany is 5.1%, it is 25.6% in Spain.
Moreover, employment declined throughout 2013 in annual terms and is expected to grow only marginally this year. This will likely mean a falling labour force participation rate, reversing the recent trend, as many unemployed workers leave the job market.
European Union officials would like 75% of the working-age population to be employed. Yet the proportion was 64.1% in 2012, making the target appear optimistic. According to the European Centre for the Development of Vocational Training (Cedefop), labour demand will remain weak in the near term, with 2.8 million jobs created annually, indicating a 0.35% annual rate of growth.
Under that scenario, by 2020 the employed share of the population would be just 68.5%, 6.5 percentage points, or 16 million jobs, below the target. Even in a period of healthy expansion such growth would be ambitious: From 2000 to 2008, the EU employment-to-population ratio rose by only 3.7 percentage points.
An aging population and changing production technologies mean most employment opportunities in Europe will be created by replacement needs, not by the creation of new positions. According to Cedefop, more than 90% of job opportunities from 2014 to 2025 will involve replacing retiring workers and others. In some industries replacement will be the sole driver of labour demand.
With new technologies and a bigger push for renewable energy sources, the service industry is becoming an employment hub, while manufacturing is in decline. The steepest drop in employment is expected in the primary sector and utilities, including mining.
Other developments include increased demand for highly skilled individuals to perform specialized functions. Automation and technological innovation have lessened the need for low-skilled workers. According to Cedefop, both replacements and newly created jobs from now to 2025 will require highly skilled workers. Still, around 50% of all jobs will require mid-level qualifications.