Unemployed in Europe Stymied by Lack of Technology Skills

DUBLIN — Week after week, newspapers issue a stream of hopeful headlines: Microsoft, PayPal, Fujitsu and scores of other companies are expanding their investments in Ireland, creating thousands of jobs as unemployment hovers near record highs.

In Dublin, about half of information technology jobs were being filled with foreign workers for a lack of skilled applicants. Paulo Nunes dos Santos for The New York Times

There is just one hitch: Not enough people are qualified to fill all the jobs. In some cases, the companies have had to look outside Ireland to recruit candidates with the right skills.

After a five-year economic crisis, the mismatch represents one of the thorniest problems facing Ireland and many other European countries. Hundreds of thousands of people who lost work, and many young people entering the work force, are finding that their skills are ill suited to a huge crop of innovation-based jobs springing up across the Continent.

“In all countries, there is an expectation that many of the new jobs created will be in the knowledge-intensive economy,” said Glenda Quintini, a senior labor economist at the Organization for Economic Cooperation and Development. “But we are seeing a worrisome skills mismatch that means a large number of unemployed people are not well prepared for the pool of jobs opening up.”

Employers have long complained that graduates do not have the skills they need. But in a recent report, the International Labor Organization warned that “skills mismatches and occupational shifts have worsened” in Europe in the wake of the crisis. People laid off in hard-hit sectors, from construction to finance, face lengthy retraining, while too few graduates entering the job market have chosen engineering, science or technology degrees for the growing innovation-based jobs market.

The gap in Europe has important consequences for the recovery as the euro zone grapples with unemployment rates stuck stubbornly above 12 percent: It may hold back a return to meaningful growth and generate “significant economic and social costs,” according to the European Commission, the policy-making arm of the European Union.

The International Labor Organization went further, warning that the gap might contribute to extended spells of unemployment and might reduce the effectiveness of policy interventions to stimulate growth. In the United States, the phenomenon has also helped contribute to a rise in long-term joblessness, the organization said.

Around two million job vacancies around the European Union are languishingunfilled, about the same number as in 2010, in sectors ranging from hotel work to computer programming, according to Eurostat, the statistics office of the European Union.

A study released in November by Eurofound, the research arm of the European Union, showed that despite the recession, almost 40 percent of companies reported difficulty in finding workers with the right skills, compared with 37 percent in 2008 and 35 percent in 2005.

The problem is especially striking for innovation-based companies, which are generating jobs at a rapid clip as technology spreads through every sector of the economy. By 2015, about 900,000 information and communications technology vacancies may go unfilled in the European Union, the European Commission warned in a recent report on the digital economy. The gap “is of major concern to European competitiveness” and to the economy as a whole, the commission said.

Governments and companies around Europe are fast-tracking efforts to retrain the unemployed for a burst of technology-related jobs. They are also stepping up campaigns to lure university students to mathematics, engineering and science in place of popular courses in the humanities and social sciences.

In Ireland, the government introduced a series of retraining and higher-education programs and sought to polish the allure of mathematics degrees as alarm bells sounded over the issue a couple of years ago. At the time, unemployment was around 14 percent after an economic collapse that destroyed jobs in the construction sector, which had employed around a quarter of the young men in the country.

Multinational technology and social media companies kept investing, lured by Ireland’s ultralow 12.5 percent corporate tax rate and an English-speaking work force. But many have been forced to look outside the country for employees with the right skills, even with 282,900 unemployed in Ireland and a jobless rate of around 12.5 percent.

The issue peaked last summer, when PayPal’s chief executive in Ireland, Louise Phelan, stoked controversy by acknowledging that the company had recruited from 19 other countries for 500 positions in its operations center in Dundalk because of a lack of foreign-language skills among Irish nationals. This summer, Fujitsu, which employs 800 people in Ireland, revealed that it had had to hire most of its Ph.D.-level experts from abroad.

All told, around half of information technology jobs in Dublin were being filled with foreign workers, while around 4,500 information technology jobs in the country were going unfilled because of a limited supply of suitably skilled applicants, various studies have shown. Paul Sweetman, the director of ICT Ireland, a business lobby group, said that part of Ireland’s strategy was to enhance its attractiveness as an investment and work destination by luring bright minds from around the world to the technology sector.

The skills shortage prevented Ireland-based companies from “effectively executing their business strategies,” which created a risk of lower productivity and slower growth, according to a recent report by the consulting company Accenture.

Part of the problem for all countries, not only Ireland, was that technology-related university training lost appeal after the dot-com bust in the early 2000s, said Regina Moran, the executive director of Fujitsu in Ireland. In Ireland, people flocked to construction or tourism work, which blossomed in the middle of the decade.

Ian Sharpe was one of them. He spent nearly 15 years working in the hotel industry until Ireland’s banking crisis strangled the Celtic Tiger and left him jobless in 2010. He languished on benefits as he tried fruitlessly to find new work.

But last year he latched on to back-to-work programs that the government had introduced with businesses.

Recently, 182 candidates — most of them unemployed, with backgrounds in fields including farming, construction and even astrophysics — went through retraining. One company, VMware, hired 82 people, and other companies hired nearly everyone else — including Mr. Sharpe.

On a recent weekday, he was huddled with a team of technicians in the Cork-based offices of VCE, a joint venture between VMware, Cisco, EMC and Intel that provides cloud and virtualization software and services.

After six months as an intern, he was hired full time to help manage a data center, with an annual salary of around 30,000 euros, or about $40,000 — about what he was making as a hotel manager.

The initiatives are not without flaws. For example, as part of the JobBridge internship program, people continue to collect unemployment and receive a modest €50 stipend per week. For many, that barely covers transportation and food. Stories have littered the Irish press of abuses by companies in the program, such as giving interns either menial tasks or fully fledged professional work with no pay, and with no job ultimately materializing.

Such talk was so widespread that Mr. Sharpe said that people had urged him not to enter the program. But he wanted to avoid the fate of a number of his friends who had fallen into a rut, where the longer they were unemployed, the less likely they were to get back into the job market.

“I know people who had to get medication for being depressed, because they don’t see anything coming,” he said.

He now has an air of hope. “I’ve gone from someone who had never been professionally involved in I.T. to getting an engineering position just nine months later,” Mr. Sharpe said.

“You can see where you’re going,” he added. “Finally, there’s something to aim for.”

– NY Times