The European Union needs active policies to address profound shifts in labour demand across the bloc that are being driven by digital transformation, the green transition, and an ageing population, a new policy brief by the EU-funded WeLaR project shows.
In their report, Labour Demand in a Changing World of Work, Mikkel Barslund and Karolien Lenaerts of HIVA-KU Leuven warn that despite historically high employment, shortages of labour and skills reveal a growing mismatch between available jobs and workers’ qualifications. EU labour markets have held up through COVID-19, geopolitical shocks, and economic shifts, but long-term trends are set to reshape employment and worsen shortages. Without urgent action, the researchers argue, these gaps could derail Europe’s green and digital ambitions.
“Europe is not running out of work – it’s running out of workers willing and able to take on the jobs that are in demand,” said Mikkel Barslund, research manager at HIVA-KU Leuven. “The real issue is the mismatch: having enough workers with the right skills, in the right place, at the right time.”
The shortages are particularly acute in health and social care, construction, renewable energy, and transport. Yet poor working conditions, limited training pathways, and slow policy coordination are holding back progress. Barslund and Lenaerts call for a new EU-level strategy to secure labour supply for transition-critical sectors, supported by coordinated investment in skills, job quality, and workforce mobility.
As the green transition progresses, it is expected to increase demand for labour in areas like building renovation, sustainable energy, and environmental services. But many of these roles are already difficult to fill, so without major retraining and improved job quality, Europe risks missing its climate targets.
One of the most pressing developments is Europe’s ageing population. By 2040, more than one-quarter of the EU’s population will be 65 or older. This is already driving up demand for workers in healthcare – roles that are notoriously hard to fill due to low pay, irregular hours, and physically demanding tasks. Labour demand is also rising in the silver economy, the expanding market for goods and services tailored to older adults, from home adaptations to leisure and financial planning. This growing sector brings new pressures on training systems and workforce planning.
“Too many of the jobs that Europe needs most are also the jobs people want least,” said Lenaerts, an Associate Professor at HIVA-KU Leuven. “If we’re serious about labour demand, we have to make these roles worth doing.”
Digitalisation and AI present additional challenges: while the technologies could raise productivity and expand remote work, they also risk displacing roles and reshuffling labour demand. IMF forecasts show that as many as 60% of existing jobs in advanced economies could be impacted by AI. The researchers call for stronger support for vulnerable groups, particularly older, less educated, and migrant workers, who are at the greatest risk of exclusion.
Enhancing working conditions, investing in skills, and supporting inclusive access to good jobs should be viewed not as social spending, but as a precondition for economic growth, the authors argue.
You can read the policy brief here.
Mikkel Barslund, Karolien Lenaerts (2025) Policy brief: Labour demand in the changing world of work global megatrends, working conditions and labour market exclusion.
