A new study shows that Europe's progress on social mobility has stalled over the past decade, holding back the continent's combined GDP by an estimated €1.3 trillion.
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More than a third of Europeans face serious barriers to social mobility, leading to lower employment rates, a less productive workforce, and slower career growth than those from wealthier backgrounds.
As Europe's population ages and businesses need new skills, the number of available skilled employees is rapidly becoming insufficient.
According to a McKinsey study, improving social mobility could raise the GDP of European countries by 3% to 9% and close the skills gap expected by 2030 without needing new training or reskilling.
"Social mobility isn't just the next step in inclusion. It's a strategic imperative for Europe's long-term competitiveness," the report argued.
The research analysed data (both publicly available and unpublished) from Eurostat’s EU Labour Force Survey to better understand Europeans’ socioeconomic backgrounds (SEBs) and surveyed more than 3,000 British, German, and Italian workers from different SEBs.
Time out of the workforce
Workers from low socioeconomic backgrounds (9.4%) have higher unemployment rates than those from wealthier backgrounds (5.3%). Their periods of joblessness also last at least five months longer on average than individuals from wealthier backgrounds.
Their reasons for unemployment also differ significantly. Compared to their peers from high SEBs, low-SEB workers are more likely to experience dismissal and less likely to leave their jobs for education or training opportunities — typically associated with career progression.
By raising the employment rate of these workers to match that of their wealthier peers, 2.1 million people could be added to the workforce.
Assuming that each extra person employed generates €74,692 of added economic value, the effect on Europe's GDP would be an increase of around €160 billion.
Change in demand and supply
Meanwhile, European businesses face a skills shortage crisis that shows signs of intensifying.
Twenty-nine European countries report significant talent constraints, with job vacancy rates rising as much as 50% since 2020.
These problems are particularly pronounced in construction, accommodation and food services, and highly skilled professional, scientific and technical fields.
Workers from lower SEBs are also less likely to have high-skill jobs compared to similarly educated individuals from wealthier backgrounds.
McKinsey's researchers found that adjusting the skills mix of jobs that low-socioeconomic background graduates pursue to match their wealthier peers with the same education level could boost GDP by an additional €590 billion.
Workers with a low socioeconomic background often progress more slowly in their careers than their wealthier counterparts, even in similar jobs.
If their pace of career progression were accelerated to match their counterparts, the result would be a 44% uplift in value creation for those in high-skill jobs and 13% for those in higher-medium-skill jobs.
This would add €570 billion to Europe's combined GDP.