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Europe faces a looming labour shortage of two million workers by 2040 according to Mario Draghi’s recent competitiveness report. This is threatening its global competitiveness. Both Europe and the U.S. are seeing shifts in labour demand due to a series of factors, including an ageing population, AI, and automation — with up to 30% of work hours potentially automated by 2030. This shift will increase demand for high-skill jobs while reducing the need for lower-skill roles.Â
Political decisions, such as reintroduction of border controls across several member states, send the wrong signal when it comes to attracting talent. Europe’s inward focus risks weakening its position in AI. To prevent a significant brain drain, Europe must act and prioritise education, innovation, and collaboration.Â
The role of AI in addressing Europe’s labour shortageÂ
AI and automation are crucial for closing the labour gap. AI is no longer just a tool—it is becoming an essential part of the workforce’s life. More importantly, AI can help better match skills to jobs by analysing labour market trends, identifying gaps, and offering insights into future needs. Â
AI-driven tools can upskill workers and direct them toward emerging job opportunities, reducing the mismatch between available skills and industry needs. The response to this challenge must also recognise the needs of workers whose jobs will be displaced by automation. The solution lies not only in attracting talent but in ensuring that those affected by job losses are equipped with new skills, training opportunities and at the centre of the policy debate.Â
Brain Drain: a real threat to Europe’s AI leadershipÂ
Europe is home to world-class universities and cutting-edge AI research centres, however, this talent pool is increasingly at risk of being drawn away by more attractive opportunities abroad.Â
U.S. tech giants are recruiting our top AI experts with higher salaries, better resources, and advanced research facilities. The U.S. remains the leading destination for the world’s elite AI talent, housing 60% of top-tier AI researchers globally. Meanwhile, European startups struggle to compete financially with tech behemoths. If this trend continues, Europe will eventually become a net exporter of AI talent, losing its leadership potential in global innovation.Â
Restrictive regulation is a barrier to innovationÂ
Regulation is crucial for ensuring ethical AI development and protecting privacy, but over-regulation could unintentionally hinder innovation. The rise in AI-focused legislation worldwide underscores this issue, with mentions of AI in legislative proceedings nearly doubling from 1,247 in 2022 to 2,175 in 2023.Â
If Europe’s regulatory frameworks become overly restrictive, it risks pushing talent toward countries like the U.S. or Asia, where regulations are less stringent. This regulation dumping could exacerbate the brain drain, especially among startups, which might relocate to more favourable environments, taking both talent and economic value with them.Â
Policymaking that attracts and retains talentÂ
The new European Commission mandate and the latest term of the European Parliament means that Europe has an opportunity to shape the future of AI innovation. By fostering an environment that supports growth and innovation, Europe can retain its talent and attract AI experts from around the world. This requires an effective regulatory framework that promotes research, encourages collaboration between academia and industry, and provides opportunities for global talent to contribute to Europe’s technological advancement.Â
Europe needs a tailormade approach to policymaking in the fast-evolving tech sector, different from the methodologies applied to more traditional industries. To seize this moment, policymakers must prioritise investment in AI research and provide financial incentives for startups.Â
This mandate offers Europe the chance to harness its potential, ensuring it remains competitive in the global tech landscape. Let’s not squander it.Â