SERIES 3 ACCELERATINGEUROPE’SGROWTH THROUGH INVESTING IN 3 PREFACE 5 01EXECUTIVE SUMMARY 11 ONE CONTINENT, MANY VARIANCES:EUROPE’S COMPETITIVENESS 21 02BUSINESS AND YOUTH PERSPECTIVESON TECHNOLOGY ADOPTION AND 39 PREFACE United Kingdom. This represents 534 millionpeople1and a collective GDP of $30 trillion inPPP terms,2almost one-fifth of global GDP. Thereport focuses on the similarities and differencesbetweenEastern and Western Europeancountries in relation to demographic shifts,slowing productivity growth, and the impactof technological change on growth and labormarkets. Drawing on secondary data from FII IS DELIGHTEDto launch the third editionof theGlobal Future of Work Report, our seriesexamining the state of labor markets around The first edition,Preparing Labor Markets inMENA for a New Technological Era, highlightedsignificant economic disparities and opportunitiesbetween the Global North and South, focusingon the Middle East and North Africa (MENA).It compared various MENA economies acrossdemographics,labor markets,youth,andtechnology preparedness, offering a detailed call These publications aim to add to the debateand help policymakers and other leaders seekingto harness their countries’ talents and resources NOTE ON REGIONAL CLASSIFICATIONS IN THIS EDITIONFor secondary research-based insights in chapter 1 and 3, regions are classified as follows: EXECUTIVESUMMARY EUROPEis often referred to as the cradleofWestern civilization and the birthplaceoftransformative movements such as theRenaissance,the Enlightenment,and theIndustrial Revolution. The continent—defined inthis research as the 27 European Union countries declining competitiveness and slower adoptionof technology, among other factors. This report identifies four critical challengesthatundermine the continent’s efforts toreinvigorate sustainable, long-term economic Europe’sproductivity growth began todecelerate in the mid-1990s, and the downwardtrend has continued since.10During the 2010s,productivity grew by an average of just 1.0% per Yet beneath this historical success lie structuralchallenges. Europe’s once-strong economicmomentum has slowed, falling behind global peers such as the United States. Despite havinga population about 1.6 times larger than the US5and a slightly higher overall GDP in PPP terms,6 At the same time, while the unemploymentrate has nearly halved since 2013,12 the vacancyrate has shot up to 1.7 times that of the rate in2013,13pointing to persistent skill mismatches Asdetailed in The Future of EuropeanCompetitiveness—a report by former presidentof the European Central Bank Mario Draghi9— Despite these challenges, Europe has anopportunity to scale ambition for higher growth 7The Conference Board Total Economy Database™, accessed April 2025. Real GDP per person employed.8“Accelerating Europe: Competitiveness for a new era,” McKinsey Global Institute, January 16, 2024.9The future of European competitiveness: A competitiveness strategy for Europe, European Commission, September 2024.10Marcello M. Estevão,Why is productivity growth in the Euro area so sluggish?, International Monetary Fund, working paper WP/04/200. and significant investment in research anddevelopment. However, even in these advancedeconomies, productivity growth has slowed in therecent decades. The two regions’ demographicchallenges are slightly reduced as migrationsomewhat reduces the impact of the declinein birth rates. While in Western Europe the Southern Europe has made considerablestridesin reducing a historically highunemployment rate. From peaks of around 20%14in 2013, after easing from the adverse shock ofthe global financial crisis, the region more thanhalved its unemployment rate, aided by laborreforms such as Spain’s crackdown on temporary and competitiveness by investing more boldly,innovatingfaster,aligning and simplifyingregulations, and developing its workforce for Eastern Europe, including the Baltic region,has experienced an economic resurgence sincejoining the European Union in the early 2000s,particularly through growth in manufacturingand digital innovation. Nations like Estonia havebecome leaders in e-governance.17But now, theregion faces headwinds: slowing growth, a less COMMON AND CONTRASTINGCHALLENGES IN EASTERN AND Europe’s economic landscape is marked byboth regional differences and shared structural Western Europe (excluding NE and SE), alongwith Northern Europe, home to some highlydeveloped economies, leads in productivitylevel,GDP per capita,and technological Across Europe, aging populations and low birthrates present a challenge, more prominently so in same time, reskilling for the future, of both newlabor market entrants and the transitions workers,enhances resilience by equipping workers withfuture-ready skills, improving employability, andaligning talent with evolving industry needs.It fosters innovation, reduces turnover, and contributing to labor shortages, slowing growth,and putting lon