Reskilling: billions of euros to be mobilised for making Europe’s automotive workforce future-proof

Message from ACEA’s Director General – November 2020

As we all know, the European auto industry is undergoing a major transformation right now. This will also have a significant impact on the lives of the 14.6 million Europeans that are employed across the automotive value chain today. Of course, we are still reeling from the short-term shock caused by the COVID-19 pandemic, which resulted in temporary layoffs, furlough schemes and reduction of working time.

Looking at the long term, however, far greater disruption will be caused by the shift to carbon-neutral mobility and the digitalisation of road transport in Europe. Tackling those two challenges puts the auto industry at the biggest technological turning point in its history. This will affect the entire European automotive ecosystem: ranging from small SMEs to the biggest manufacturers, from suppliers and dealers to maintenance and repair workshops.

Above all, these structural changes to the DNA of our industry will have a significant impact on the workforce and the skills required from employees. On the one hand, certain types of jobs are likely to disappear in the medium term, while at the same time the sector needs to recruit qualified people for emerging jobs with completely new skill profiles.

The main drivers of this change are the EU’s ambition to reach carbon neutrality by 2050, which will lead to the electrification of mobility and the introduction of more alternative powertrains in general, as well as upscaling the production of batteries and fuel cells in Europe. In addition, there are many developments in the digital domain; such as more complex in-vehicle software, the use of Artificial Intelligence, the deployment of ‘mobility as a service solutions’ and the shift to online sales of vehicles.

In this respect, there is a huge skills gap to bridge between the future needs of the auto industry and the current workforce. This means that we also need to adapt and step up training and education. On top of that, the current crisis is speeding up the transformation of our sector, which is now happening at a faster rate than initially expected. It is thus essential that Europe’s labour force rapidly adapts to the required skills in order to ensure the global competitiveness of the EU automotive industry.

For instance, compared to vehicles with conventional engines, both the production and maintenance of battery electric vehicles is much less labour intensive, given that they are mechanically less complex and simply contain fewer parts. And although new jobs are expected to be created in charging infrastructure deployment and battery production and recycling, for example, these jobs will largely require skills which those who are working in manufacturing today are unlikely to have yet.

Hence the need for large-scale reskilling and upskilling programmes. The latter focussing on teaching employees new skills to retain their current jobs, while the former is all about preparing people for a completely new position.

Personally, I strongly believe that we need to ensure that this transition happens in a socially responsible way. Automobile manufacturers will continue to invest in reskilling and upskilling, but these changes also need to be addressed through robust policies for the labour market, an effective social dialogue with all partners, investments in training and education, and by creating specific redevelopment plans for automotive regions.

The auto industry accounts for 11.5% of EU manufacturing employment today, or some 3.7 million jobs in total. However, in various regions in the Czech Republic, Germany, Italy, Slovakia, Hungary, Romania and Sweden, the automotive sector provides more than 20% of total manufacturing employment. This means that one in five manufacturing jobs in those regions directly depends on automobile production, which explains the need for tailored regional plans on skills and redevelopment.

In my view this will also require a human-centric approach, as we need to keep the focus on the impact on our employees. Again, retraining the current workforce and finding people with new skills is something that industry cannot master alone. We need to do this together with key players such as social partners, education and training institutes, national governments and regions.

A major step in that direction was taken earlier this month, when we launched the Skills Partnership for the Automotive Ecosystem. The aim of this new partnership is to create a European up- and reskilling framework, which supports job retention, creates new employment opportunities, maximises the auto industry’s competitiveness and contributes to the post-COVID-19 recovery of the sector.

This initiative should also be seen in the context of, and as a follow-up to, a number of skills projects funded by the European Commission, in which ACEA has already been actively involved in for years.

For the coming years, our joint ambition is to reach five percent of those working in the wider automotive sector annually. Concretely this means that some 700,000 employees will be provided with opportunities for reskilling and upskilling every single year.

According to calculations by PricewaterhouseCoopers, based on an average investment of €10,000 per employee, this adds up to an overall commitment of around €7 billion to the retraining of Europe’s automotive workers by the private sector and public authorities. And these investments will not only benefit employers, governments will also save on unemployment benefits and will receive more social and tax revenues. In fact, according to the same study, each euro invested in upskilling will generate between two and five euros in savings for society.

Likewise, if we want to establish a truly European labour market for the automotive sector, we also need a system for the EU-wide recognition of skills and relevant knowledge, including definitions of skills and job roles that are mutually accepted by member states and national authorities.

Our new Skills Partnership for the automotive sector actually complements the Pact for Skills presented by the European Commission earlier this month, which is one of the flagship initiatives of the European Skills Agenda that was presented over the summer. A few weeks ago, together with our partners, we had a roundtable discussion with European Commissioners Nicolas Schmit (Jobs and Social Rights) and Thierry Breton (Internal Market) to discuss the Pact for Skills.

As I stressed during this meeting, our sector fully supports the EU’s new skills initiatives, but we jointly call on the Commission to set up a public-private partnership to mobilise the necessary funds. The Skills Partnership initiated by the sector is just a first step; indeed for the time being its implementation is limited to pilot projects in five automotive regions in 2021.

In order to scale up this important project, Europe should now support it with structural funding and help to convert it into a full-fledged public-private partnership. We believe it is important that existing European funding instruments are assessed by the Commission, with a view to allowing the use of all suitable instruments – including the European Social Fund and the European Investment Bank – to guarantee that Europe’s automotive workforce is ready for the future.

Eric-Mark Huitema
Director General of ACEA