EU Proposes Increased Funding and Vocational Training to Address Concurrent Worker Deficit and Unemployment Issue
The European Commission has outlined a strategic approach to address the persistent issue of long-term unemployment and skills gap across the European Union. According to the Commission, the focus will be on targeted hiring bonuses, EU funds for training, and mobility schemes to help workers move to where jobs are.
The Commission's attention is particularly drawn towards member states with a labour market challenge that stems not from a lack of vacancies but from the mismatch between available jobs and those who have been out of the market for years. This issue is particularly prevalent in countries like Belgium, where many job seekers lack the necessary IT or technical skills required for current vacancies.
The Commission's strategy echoes the successful models of countries like Denmark and Sweden, where strict job-search obligations combined with generous retraining have kept long-term unemployment far lower than the EU average. The combination of obligations and real support in Scandinavia is what makes the difference in reducing long-term unemployment.
Similarly, Germany, Sweden, and the Netherlands have implemented long-standing successful programs to improve the efficiency of employment and retraining initiatives for long-term unemployed individuals, women, migrants, minorities, and people with disabilities.
Retraining is essential but challenging after long periods of inactivity. The Commission acknowledges this and emphasises that support should be aimed at those who are systematically underrepresented in the labour market, including long-term unemployed, women, migrants, minorities, and people with disabilities.
In Scandinavia, if a job seeker repeatedly refuses offers, benefits can be withheld, but only after authorities make sustained efforts to guide them back into work. This approach, which balances demands on job seekers with comprehensive support, is what the European Commission aims to emulate in its new push.
The Commission's strategy also addresses the 'structural mismatch' between labour supply and demand, a concern also raised by the European Central Bank (ECB). The ECB has stated that wage growth is slowing across the eurozone, even as labour shortages persist. The Commission believes that targeted hiring bonuses and training schemes can help those groups who are often excluded from jobs gain access to the labour market.
However, the Commission warns that without sustained investment in skills and targeted activation for those furthest from the labour market, changes to benefit rules alone could simply shift people from one statistic to another without bringing them closer to real employment. Early signals for 2026 point to further moderation in wage growth, which underscores the need for this strategic approach.
Persistent labour shortages could still reignite upward pressure on wage growth if hiring accelerates, a concern also raised by the ECB. The ECB's new wage tracker shows negotiated pay deals, including one-off payments, slowed to about 3.2% growth in 2025 from 4.6% in 2024.
The Commission's new push for bonuses, mobility schemes, and skills investment should follow the Scandinavian principle: Demanding more from job seekers while at the same time doing much more to guide them back into work. This approach, if successful, could help bridge the gap between the millions of job openings and the millions of people still out of work across the European Union.
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