Forecasting Occupation and Skills Mismatch Amidst Demographic Shifts in the EU

Guillaume Marois, International Institute for Applied Systems Analysis (IIASA)
Michaela Potancokova, International Institute for Applied Systems Analysis (IIASA)
Agnieszka Bezat-Jarzebowska, Kozminski University
Jesus Crespo Cuaresma, Wittgenstein Centre (IIASA, VID/ÖAW, WU)

This communication presents the Link4Skills Microsimulation Model (Link4Skills-Mic), which has been developed to forecast the occupation of workers in the European Union (EU27) in relation to country-specific labor demand from 2020 to 2060. The model allows to explore how demographic changes will affect the occupational distribution of the EU workforce. Link4Skills-Mic simulates demographic and socio-economic characteristics at the individual level, including age, gender, educational attainment, and labor force participation, together with skill-specific labor demand and supply at the country level. The results show growing labor mismatches, with high vacancy rates in medium- and low-skilled occupations and significant underutilization of highly educated workers, as the share of high-skilled workers grows faster than the demand. Several policy scenarios are explored, including increased immigration, enhanced education, mid-career retraining, delayed retirement, and automation. Findings suggest that automation could reduce job vacancies but may exacerbate underutilization if not accompanied by integrated policies combining education, training, and employer adaptation to address future labor market challenges. This model offers insights into the evolving EU labor market, emphasizing the importance of proactive strategies to align workforce skills with emerging job demands and reduce skill mismatches in a rapidly changing economic landscape.

Keywords: Population projections, forecasts, and estimations, Human Capital, Education, and Work, Economic Demography

See paper.