New research published by the European Confederation of Trade Unions (ETUC) claims that low pay is exacerbating Europe's labour shortages, and employers should offer better-paid jobs to address the issue.

A recent analysis of job vacancy rates and wages in twenty-two EU countries shows that industries hardest hit by labour shortages pay an average of 9% less than those who find it easier to recruit. This trend has caused production problems for a quarter of EU companies after the EU job vacancy rate reached a new high last year.

Although a lack of skills is often blamed for labour shortages, the new analysis of EU data shows that low pay is one of the main drivers. The ETUC's research institute, the European Trade Union Institute (ETUI), reveals a clear connection between low wages and high vacancy rates.

General Secretary of Fórsa, Kevin Callinan said that low-pay and the impact of inflation on living standards is causing a cost-of-living crisis across Europe:

“This research has shown that there is a correlation between low wages and labour shortages. Ireland’s social wage is very low by comparison to other modern EU countries. Our public service employment is also completely out of step with our EU partners. Increased wages and cost of living supports will continue to be the focus for Fórsa as we progress with public service pay talks to ensure we remain at close to full employment.”

In thirteen out of twenty-two EU member states, the industries that experienced the most significant labour shortages between 2019 and 2022 also offered the lowest wages. The countries with the most significant pay gaps between sectors with the highest and lowest increases in labour shortages were Italy (€4.17 an hour), Luxembourg (€4.16), Germany (€3.26), the Netherlands (€2.49), and Greece (€1.51).

The ETUC Congress recently called on national governments to extend their support to unions to increase the proportion of workers covered by collective bargaining in a bid to raise pay rates and eliminate low pay contributing to Europe's labour shortage.

Speaking at their four-yearly Congress, ETUC General Secretary Esther Lynch said:
 
“Decent pay is good for workers, good for employers, and good for Europe. Low pay is fuelling the cost-of-living crisis, while labour shortages are harming Europe’s economic performance and public services. It’s clear from this data that low pay is one of the main factors driving Europe’s recruitment challenges.

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