For the first time, the European Union will evaluate whether member states are funding human capital sufficiently to back Europe’s economic and industrial goals. The European Commission is prepared to warn that high energy costs, industrial restructuring, and the green transition could trigger extensive job losses in the coming years.
The data, obtained by POLITICO, will be featured in the European Semester Spring Package, scheduled for release on Wednesday, which outlines economic and policy guidance for EU nations. These findings highlight intensifying anxieties in Brussels regarding the magnitude of the economic hurdles ahead.
„Europe’s competitiveness will not be built by technology, capital or financial regulation alone,” Roxana Mînzatu, Commission Executive Vice President for Skills, told POLITICO. „It will be built by people, the skills they develop and the opportunities we create for them to contribute fully to our economies and societies.”
With the ongoing US-Israeli conflict in Iran impacting oil prices, the Commission forecasts that energy price volatility could endanger up to 560,000 jobs in 2026. The most vulnerable sectors include construction, metals, chemicals, and transportation.
Slowing economic momentum has prompted Brussels to adjust its unemployment forecasts. Last autumn, the Commission predicted joblessness at 5.9 percent for 2026 and 5.8 percent for 2027. It now projects 6 percent for both years. National debt is also expected to rise, with the aggregate EU government deficit widening from -3.1 percent of GDP in 2025 to -3.5 percent in 2026 and -3.6 percent in 2027. The upcoming package aims to redirect focus toward the workforce, asserting that Europe’s competitiveness strategy cannot succeed without tackling labor and skills shortages.
Sectors under Strain
- Automotive: Vital to Germany’s economy, this sector faces 600,000 at-risk jobs due to the shift away from internal combustion engines and aggressive Chinese competition.
- Batteries: Around 85,000 positions are currently in jeopardy.
- Solar & Steel: Market pressures affect nearly 59,000 jobs in solar manufacturing, while low-carbon transitions impact another 4,500 roles in steel production.
These vulnerabilities fuel an ongoing debate in Brussels over whether Europe is losing ground in strategic industries to the US and China, despite initiatives to revitalize domestic production.
Prioritizing Skills
Concurrently, European businesses report persistent hurdles in recruiting qualified staff. Commission data shows that 68 percent of medium-sized enterprises faced skills shortages in 2023, and by 2024, 77 percent viewed labor shortages as a major barrier to investment.
These insights drive the core message of this semester’s package: economic resilience hinges on investing in people. For the first time, the accompanying EU recommendations will integrate education, vocational training, adult learning, STEM skills, and reskilling directly into the EU’s economic governance architecture.
„Investing in people is Europe’s strongest competitiveness strategy and the foundation of a Union that can out-innovate, out-compete and withstand any challenge,” Mînzatu stated. „This is what changes with this European Semester: Human capital is now treated as a core driver of competitiveness, with country-specific guidance for each member state.”
The employment challenges highlighted go beyond job cuts. The Commission notes that low-income households will bear a heavier burden from rising transport fuel costs, consuming an extra 1.4 percent of their income. It also points to persistent labor market disparities, observing that non-EU citizens face a much higher likelihood of being overqualified for their roles than local workers. Furthermore, Brussels raised concerns over job quality, noting that one in five workers are stuck in low-wage, low-productivity roles, while one in twelve face the risk of in-work poverty.
Faced with these conditions, the Commission will utilize the package to urge member states toward reforms that enhance skills, upgrade job quality, and bolster social safety nets. As part of Wednesday’s roll-out, Brussels will also issue a fiscal warning to Bulgaria following an audit of its spending. Germany, Estonia, Latvia, and Slovenia underwent equivalent scrutiny but cleared the evaluation safely—for now.
