New SkillPULSE research co-authored by Dr Sangwoo Lee standardises European Skill Shortages Indicator using big data and survey benchmarking

As part of the Horizon Europe-funded Skills PULSE project, a newly published study in Applied Economics introduces a novel empirical framework to identify and measure potential skill shortages across European labour markets.

Co-authored by IER’s Dr Sangwoo Lee alongside Seamus McGuinness, Elisa Staffa, Lorcan Kelly, and Paul Redmond, the paper addresses a longstanding gap in the skills mismatch literature, where definitions of skill shortages vary widely and rely heavily on subjective employer surveys.

To overcome these limitations, the research team developed an objective measurement approach that benchmarks real-time job advertisement data from Lightcast against employee survey data from the 2021 European Skills and Jobs Survey (ESJS2). By anchoring online vacancy criteria to the actual distribution of skills and competencies utilised in the labour market, the model creates a reliable, replicable indicator for annual tracking across EU member states.

Crucially, the methodology distinguishes genuine skill shortages from broader labour shortages—such as those caused by low wages or poor working conditions—by setting strict multi-dimensional thresholds around job complexity, task volume, prior experience, posting duration, and above-average pay.

Using this framework, the study estimates that approximately 2% of all vacancies across the EU represent genuine potential skill shortages. These shortages are predominantly concentrated in high-skilled managerial and technical occupations, particularly ICT Professionals, Business and Administration Professionals, and Administrative and Commercial Managers.

Furthermore, the findings reveal that potential skill shortages correlate strongly with occupations experiencing rapid changes in skill requirements over time. Overall, this research provides policymakers with a standardised tool to evaluate labour market tightness, track the impact of skills policies, and benchmark national performance.