Dr. Gijs van Houten:

I am a senior research manager in Eurofound, the European Foundation for the Improvement of Living and Working Conditions. We are the only such EU agency in Ireland and our role is to provide knowledge and expertise to support EU institutions, governments, employers, trade unions and civil society organisations in shaping and implementing social and employment policies. We carry out research and collect comparative data through our high-quality, cross-national surveys and a network of national correspondents.

The European Commission states that the European Union Year of Skills helps people to get the right skills for quality jobs and supports companies in addressing skills shortages in Europe. It places a very strong emphasis on skills supply, speaking about the need for a workforce with in-demand skills for long-term sustainable growth and competitiveness and to ensure that the green and digital transitions are socially fair and just.

However, without demand-side policies encouraging organisations to optimise skills use to achieve their competitive advantages, the potential benefits generated by supply-side policies aimed at improving the skills base will not fully materialise. Labour and skills shortages are at the forefront of the European political agenda and job vacancy rates saw a sharp increase in almost all EU member states in 2021 and 2022. They dropped a little bit in 2023. According to Eurostat, in the fourth quarter of 2023, vacancy rates were highest in Belgium, the Netherlands and Austria, at over 4%, and lowest in Spain, Bulgaria and Romania, at just under 1%. At 1%, the vacancy rate in Ireland was among the lowest in the EU.

Ireland ranks in the EU’s top five in terms of the proportion of the workforce with basic or above basic digital skills. However, research has shown that in order to perform best, employees not only need the right skills to do the job, but also the opportunity to use these skills and the motivation to do so. Organisations can implement management approaches to facilitate this by enabling learning and skills development through job design; putting monetary and non-monetary motivational drivers in place; and granting autonomy and facilitating voice. Whether they do so depends on how much the organisational culture is people-centred.

As is confirmed by the data from Eurofound's European companies' survey, which we conducted jointly in 2019 with the EU agency for skills, there is a strong effect of culture on ability, motivation and opportunity. Ability, motivation and opportunity have small but significant effects on the performance of businesses. Research confirms that businesses and companies with people-centred workplace practices, including practices that foster ability, motivation and opportunity, also do better both in terms of workplace well-being and establishment performance, as we have shown in the presentation. The presentation also shows that businesses in the high investment-high involvement group, that is, those that have a lot of practices in place that invest in the capacity for workers to carry out their job well, namely, good working conditions, also have quite significant practices for involving employees in decision-making.

They perform much better than the average group in terms of the well-being of their staff and performance.

Ireland is in the top half of the EU distribution in terms of the prevalence of people-centred practices. It is not doing badly. However, a sizeable proportion of Irish businesses is in the selective investment and moderate involvement group, which means these businesses have a lot of practices in place but only grant these perks to a selection of employees. There seems to be scope for improving workplace well-being and establishment performance in general, and skills utilisation in particular, by extending existing practices more universally and deepening the opportunities for direct and indirect employee participation.

The European Year of Skills 2023 reminded us of the importance of improving the skills base of the labour force. To successfully further the green and digital transitions, active labour market policies need to be revised and curricula for education and vocational training need to be updated to ensure the availability of the skills required to integrate new digital technologies and take up green jobs.

Our findings underline that such supply-side interventions will be more effective if skills use in organisations is improved. This requires looking at working conditions more generally, including job design, motivating workers and ensuring that there are channels in place for involving workers and their representatives in decision-making. These people-centred managerial practices not only improve skills utilisation, but also boost innovation and digitalisation.

Our results show that these practices are much more prevalent in businesses with an organisational culture that values human capital. Managerial education should therefore cover the building of a people-centred organisational culture and the implementation of managerial approaches that create opportunities for employees to use and develop their skills. People-centred practices are relatively prevalent in Irish businesses but, as mentioned, there is room for improvement. The social partners can help promote a people-centred organisational culture and create the right conditions for constructive employee involvement at the workplace.