Europe’s Skill Divide: The Hidden Risk to the Twin Transition

Executive Summary

Europe’s future competitiveness will be decided in classrooms and training centres. In “A Continent in Search of Skills? Aiding the Twin Transition through Skill Formation Policy,” we show that the success of Europe’s clean-energy and digital transitions depends on building, attracting, and mobilising the right workforce. Today, shortages, regional imbalances, and fragmented governance threaten to slow progress and weaken resilience.

EU constraints can become a strategic advantage. Because treaties limit the EU to a supportive role in education and training, Brussels cannot impose uniform rules. This paper argues that these constraints can be turned into strengths: the EU is well placed to coordinate, finance, and connect diverse national and regional strategies, enabling place-based responses to labour market needs.

Skill needs are diverse—and so must be the policy response. Data show large differences in demand across Member States: clean energy often requires mid-skill vocational profiles, while digital industries depend heavily on tertiary-educated professionals. One-size-fits-all solutions are ineffective. The EU should help countries expand both STEM graduates and high-quality vocational training, tailored to sectoral and regional specialisations.

National resistance to harmonisation limits EU action — but mobility and recognition can work. Vocational education and training (VET) systems remain nationally distinct, and decades of attempted harmonisation have delivered little. Still, EU policy can support mutual recognition of qualifications, facilitate worker mobility, and fund national VET initiatives. In higher education, targeted expansion—such as boosting STEM skills in countries at the frontier of energy and digital technologies—is more effective than universal expansion.

The policy challenge is urgent. Without a coordinated approach, regional asymmetries in skill shortages will widen as the transition accelerates. The EU’s role is not to impose uniformity, but to catalyse national reforms, mobilise funds, and ensure interoperability of diverse systems.

Policy recommendations

1. Align EU support with national and regional labour market needs. Use EU funding and monitoring tools to incentivise place-based skills strategies.

2. Reframe the EU’s role in VET: from harmonisation to mobility. Promote qualification recognition and worker mobility, while supporting national success stories.

3. Target higher education expansion where it matters most. Boost STEM skills in countries and regions leading Europe’s clean energy and digital transitions.