The second annual European Jobs and Skills review examines employment and skills trends across Europe and in the continent's largest economies, considering how policy can better combat unemployment, underemployment and inactivity.

The structures of European economies and the types of jobs that they support are changing. There has been an EU-wide shift in the labour market away from low-skilled jobs and towards high-skilled ones, but there are signs that the supply of skills is failing to match demand from employers.

At the same time, young people are finding it increasingly hard to get a foothold in the labour market, and the proportion of the workforce employed on full-time, permanent contracts has shrunk.

The southern European economies in particular are still combating the effects of the sovereign debt crisis – high levels of joblessness and insecure or temporary work. And across the rest of the continent, advances in automation and increasing exposure to global competition act as more long-term headwinds blowing skill supply and demand out of alignment. Europe must rise to the difficult challenge of combatting unemployment, underemployment and inactivity.

Understanding the likely changes in the European labour market over the next decade is essential if policymakers and firms are to set Europe onto a path towards permanently lower unemployment. To do so they must create many more well-paid jobs, minimise the long-term erosion of skills as a result of recession, and invest to reshape and re-skill the labour force for the jobs of the future.

This second annual European Jobs and Skills review examines trends in employment and skills development across the EU28, and in Europe’s five biggest economies: Germany, the UK, France, Spain and Italy. It assesses how effective policy has been to date at boosting employment and skills, and identifies the key labour market weaknesses that firms and policymakers need to address in the coming years.