EU countries risk mass job losses in the coming years as high energy costs, industrial restructuring and the green transition weigh on the economy, the European Commission is set to warn.
The figures, seen by POLITICO, will appear in the European Semester Spring Package, which sets out the Commission’s economic and policy recommendations for EU countries and is due to be presented Wednesday. They underscore growing concern in Brussels about the scale of the economic challenges facing the bloc.
“Europe’s competitiveness will not be built by technology, capital or financial regulation alone,” Commission Executive Vice President for Skills Roxana Mînzatu 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 U.S.-Israeli war in Iran showing no sign of ending and continuing to affect oil prices, the Commission projects that energy price pressures in 2026 will put as many as 560,000 jobs at risk. The sectors most exposed include construction, metals, chemicals and transport.
Weaker economic activity has forced the Commission to revise its joblessness projections. Last autumn, the Commission predicted that unemployment would stand at 5.9 percent in 2026 and 5.8 percent in 2027. It now believes it will be 6 percent in both years.
The Commission also expects governments to take on more debt, with the general government balance for all 27 EU countries widening from -3.1 percent of GDP in 2025 to -3.5 percent in 2026 and -3.6 percent in 2027.
The package will seek to shift attention toward the workforce, arguing that the EU’s competitiveness agenda can’t succeed without addressing mounting labor shortages and skills gaps.
The Commission identified the sectors facing employment pressures.
In Europe’s automotive sector, key to Germany’s economic success, the Commission will say that 600,000 jobs are at risk as the industry grapples with the transition away from combustion-engine vehicles and strong competition from China.
In the battery industry, some 85,000 jobs are in jeopardy. The solar manufacturing sector accounts for nearly 59,000 jobs affected by market pressures, while low-carbon measures could affect another 4,500 positions in the steel industry.
The concerns reflect a broader debate in Brussels about whether Europe is losing ground in strategic industries to rivals like China and the United States, despite plans to boost domestic manufacturing.
Boosting skills
At the same time, employers across the bloc continue to report difficulties in finding workers with the right qualifications.
According to the Commission’s figures, 68 percent of medium-sized companies reported skills shortages in 2023. By 2024, 77 percent of firms said labor and skills shortages were acting as a barrier to investment.
The findings reinforce the central message of this semester package: Economic resilience increasingly depends on investing in human capital.
For the first time, the EU recommendations accompanying the package will include a dedicated focus on putting education, vocational training, adult learning, STEM skills and reskilling closer to the heart of the EU’s economic governance framework.
“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,” said Mînzatu. “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 outlined in the document extend beyond job losses.
The Commission will warn that low-income households could face a disproportionate burden from higher transport fuel prices, costing them an additional 1.4 percent of their income. It will highlight persistent labor market inequalities, noting that non-EU citizens remain significantly more likely to be overqualified for the jobs they hold than native workers.
Brussels will also point to concerns about job quality, saying one in five workers are trapped in low-wage jobs in sectors with weak productivity growth, while one in 12 face a risk of in-work poverty.
Against that backdrop, the Commission will use the package to push EU countries toward reforms aimed at boosting skills, improving job quality and strengthening social protection systems.
As part of Wednesday’s package, Brussels will also put a red flag on Bulgaria’s financial health after scrutinizing its spending habits. Germany, Estonia, Latvia and Slovenia have undergone similar scrutiny but emerged from the Commission’s assessment unscathed — for the time being.
Via Politico
