Addressing Europe’s reskilling challenge

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This article is part of a series in which OECD experts and thought leaders  from around the world and all parts of society  address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.

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Over the next decade, as workplaces rapidly adopt automation technologies, we estimate that 94 million workers in Europe, about two in five, will see 20% of their jobs taken over by machines. About 21 million of them will need to switch occupations as a result.

Even before the COVID-19 pandemic, the scale of this automation challenge suggested that a major push was needed to provide workers with new skills or upgrade existing ones. But this crisis has heightened that urgency. Our research finds that many of the European workers most vulnerable to automation displacement in the longer term are also facing the worse short-term consequences of the crisis through reductions in hours or pay, temporary furloughs, or permanent layoffs. Among others, COVID-19 is disproportionately displacing young people, part-time workers, and those without a tertiary degree.

Read the OECD Employment Outlook 2020 and our Policy Responses on the OECD COVID-19 Hub

Creating new career pathways will thus be essential to move workers out of a shrinking pool of low-end jobs and into work with brighter prospects. For now, we find that most Europeans that change occupations tend to move from one declining occupation, such as office support, production, and customer service, to other declining occupations; or from one growing occupation, such as STEM professions or business and legal professionals, to other growing occupations — and that there is little crossover.

All stakeholders have a role to play in addressing this skills challenge. That includes employers, who will need to work together with governments, educators, and the social sector. Companies are key players in this equation, since they have a clear view of the roles that are growing and the skills needed for workers to fill those roles. They will also be among the first to suffer from a shortage of the workforce skills they need in the automation era. Businesses are getting involved in several ways:

By rewriting job postings to focus on skills, employers can vastly expand the pool of applicants they consider — and hire workers that are just as effective.

First, firms can create their own talent pipelines working with local secondary and post-secondary educational institutions. Rather than assuming the labour market will provide qualified applicants, companies on both sides of the Atlantic are getting involved in developing degrees and the course curriculum with local educators to create a pipeline of talent needed. To target workers already in the labour force and transitioning out of shrinking jobs, companies can work with online educators to develop short, targeted training programmes for entry-level positions. Much like computer coding “bootcamps”, the goal is to give individuals the necessary skills they need in a matter of weeks, and then enable them to learn other skills on the job. One such initiative is Generation, a non-profit organisation which targets unemployed young people and helps them overcome the most persistent barriers to finding stable employment by offering 12 to 15-week training programmes. Since its founding five years ago, more than 30,000 people have graduated and found jobs in 13 countries, including the United States, Spain, Brazil, and India. 

More on the Forum Network: “Skills in Transition”: Highlights from the OECD Forum Virtual Roundtable by Willemien Bax, Head of the OECD Forum

Second, companies can expand their pool of qualified applicants for many jobs by focusing on the skills required to perform well, rather than educational degrees. Today we see “degree inflation,” defined as the demand for college degrees for jobs that workers currently filling them do not have. In the United States, for example, about two-thirds of job ads for executive assistants require a bachelor’s degree, whereas only 20% of current EAs have a BA. Degree inflation makes it harder for employers to find workers, discourages young people without degrees, and can lead to wage inflation. By rewriting job postings to focus on skills, employers can vastly expand the pool of applicants they consider — and hire workers that are just as effective. An added bonus: focusing on skills expands diversity in the pool of applicants. In the United States, the Business Roundtable has launched an initiative on workforce partnerships that includes a focus on skills credentials. “New collar” jobs span the gamut from office functions to production line roles to tech jobs, including positions in high-growth fields such as cybersecurity, cloud computing, and network administrators. IBM, for example, reports that about 15 to 20% of new hires for the company have “new collar” credentials, without a college degree.

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Third, companies could encourage internal upward mobility by conducting an audit of the current skills of their employees and mapping them to the skills needed for new positions in the future. They could then seek to fill skills gaps that emerge from this comparison by in-house training or online classes. Several companies in Europe, including the software company SAP and a leading insurer, are already doing this. In the United States, Walmart has established Walmart Academy, which trains hourly sales associates to be managers. Three in four store managers, who earn more than USD 100,000 annually, started as hourly associates.

The scale of the reskilling challenge in the coming years is very substantial and may be exacerbated by COVID-19. But the good news is that many companies are starting to devote more effort to building programmes to retrain their workforce and create new career opportunities for a broader set of individuals.

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Tackling COVID-19 Future of Education & Skills Future of Work

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Susan Lund

Economist & Partner, McKinsey & Company

Susan Lund is a partner at the McKinsey Global Institute based in Washington, DC.

1 Comment

Go to the profile of Michael R Golas
Michael R Golas 3 months ago

As someone who fits this profile almost exactly, these are some great target points to be addressed with both workers and employers. A major hurdle I've experienced is bridging the language barrier between industries. As an experienced event producer, I believe that many of my skillsets would be valuable to supply chain, and even strategic design, but sifting through job descriptions can be like reading another language. While I've chosen to take this time to realign a new degree with a career change, a support system that could assist with a vernacular overhaul of one's resumé may be an effective way to help the worker position themselves better through transitions. Paired with the measures outlined in this article, there are some great opportunities for new hiring guidelines and platforms to be established.