Employee progression in European labour markets

Economic recovery in Europe remains a far-off prospect, and this is reflected in the EU's labour market performance: the unemployment rate is higher now than it was two years ago, and the most recent data shows that the working-age employment rate has dropped. The continent's labour market has deep underlying issues. Several decades of globalisation and technological change, which the institutions governing the labour market have struggled to catch up with, have hollowed-out middle-income jobs and created a disconnect between overall productivity growth and wages. Low pay, in-work poverty and job insecurity are widespread, while at the same time employers are struggling to fill many highly-skilled vacancies.

Understanding in-work progression in Europe is vital to finding a solution to these problems. Improving individuals' prospects for promotion and advancement offers a route out of in-work poverty for those workers stuck on low pay. Furthermore, if Europe's skills needs are to be met, the existing workforce needs more and better in-work training and lifelong learning, and the skills of entry-level workers must likewise be improved. Finally, the impact of job insecurity and involuntary underemployment can be mitigated if individuals are able to progress into permanent and full-time jobs.

This report explores how rates of in-work progression vary across European economies, focussing on four dimensions of in-work progression: occupational progression, earnings, hours and contract progression. We find signs that despite Europe's faltering recovery, demand for highly skilled labour is outstripping supply, particularly in many specific, highly specialised occupational groups such as ICT professionals. At the same time, the number of jobs in the middle of the occupational distribution is shrinking – a trend that is likely to have an effect on career pathways, and which if it contunes unchecked may exacerbate existing skills shortages.

We conclude by offering recommendations for how employers can adapt in order to fill highly-skilled vacancies, and how national governments can design labour market institutions that support progression and labour market inclusion.