Questions and Answers on Harnessing Talent in Europe's Regions and the Demography Report

What is the ‘talent development trap' and which regions are concerned?

The ‘talent development trap' occurs in regions with insufficient skilled workers and university and higher-education graduates to offset the impact of the declining working age population due to depopulation and an ageing population. Tackling the shrinking of the working age population requires higher productivity and more innovation, and thus skilled workers. Lack of economic dynamism and innovation leading to a low demand for skills could seriously hamper regions' competitiveness and growth potential.

The Communication distinguishes between two categories of regions affected by this risk, representing 30% of the EU population:

• The first group comprises 46 regions that are already experiencing a ‘talent development trap'. These regions face an accelerating decline of their working age population and a low share of people with a university or higher-education degree. The data refers to the period between 2015 and 2020. The resulting insufficient development of skills makes it difficult for these regions to innovate and improve their productivity. These regions account for 16% of the EU population. Most of them are less economically developed than the rest of the EU, with a GDP/head around 64% of the EU average. 31% of their population live in rural areas, compared to 21% on average in the EU.
• A second group comprises 36 regions that risk falling into a ‘talent development trap' in the future. They are severely affected by the departure of their population aged 15-39. They therefore face the risk of not having the skills needed to ensure their economic and social development. This group accounts for 13% of the EU population.

What dedicated support is envisaged compared to the regional development strategies which form the basis for Cohesion policy interventions?

The Commission will help pilot regions in a talent development trap develop, monitor and implement regional strategies to become more talent attractive and identify projects most cost effective to address the situation.

It will also help regions at risk of falling in a talent development trap design strategies to adapt to demographic transition and identify reforms to address the situation.

This will allow the place based regional development strategies underlying Cohesion Policy interventions to be adjusted and targeted on solutions to the talent development trap.

Under the steer of the European semester, such strategies and underlying reforms and projects, should be supported, in particular by Cohesion Policy together with other EU funding instruments.

Which financial assistance is available?

Several sources of financial assistance are available:

• ‘Interregional Innovation Investments' are funded by the European Regional Development Fund (ERDF). They stimulate innovation ecosystems between EU regions by providing advisory and financial support to innovation projects in joint smart specialisation areas. Under the new strand ‘capacity building', they will help testing new approaches and make regions currently in a talent development trap more attractive for high-skill jobs. The Commission manages these investments which benefit regions selected following open calls.
• The European Urban Initiative, funded by the ERDF, supports cities to build capacity and knowledge. It also develops innovative solutions to urban challenges. It will launch in 2023 a call for innovative actions to test place-based solutions led by cities and to address challenges faced by shrinking cities (including difficulties in developing, retaining or attracting talents).
• Cohesion Policy funds may also be mobilised. The mid-term review of 2021-2027 Cohesion Policy programmes, scheduled for early 2025 and steered by the country specific recommendations adopted in 2024, will provide an opportunity to assess the situation of regions facing a talent development trap and adapt, if necessary, the programming of Cohesion Policy funds.

How will regions benefit from the Technical Support Instrument?

• The Technical Support Instrument (TSI) is the EU programme that provides tailor-made technical expertise to EU Member States to design and implement reforms. The support is demand driven and does not require co-financing from Member States.
• Through the annual Technical Support Instrument calls, the Commission will continue to propose expertise and reforms in support of regional authorities willing to steer the development of talents also by equipping young people with skills for enabling them to preserve or have access to new jobs in the digital and green economy.

What types of support is TSI already providing in the area of skills?

TSI is already supporting benefitting Member States to undertake reforms that, for example, improve the digital skills of public administration, integrate migrants into the labour market by harnessing talent and skills from third countries, improve the digital transformation of health and care systems and the digital skills of health professionals.

How is the Commission using Cohesion Policy programmes for 2021-2027 to address the demographic changes outlined in the Demography Report?

The Commission supports Member States and regions to pursue tailored policies to make affected territories more dynamic - socially and economically - and to create economic, employment and educational opportunities. Under Cohesion Policy, Member States and regions develop and implement integrated strategies and tailor-made investments to respond to demographic challenges wherever necessary they are identified as a particular challenge.

It is particularly important for such regions to boost economic development, innovation and competitiveness as well as a friendlier business environment, advanced digital services, and high-quality governance alongside providing access to better social services such as health- and long-term care, childcare and education. Cohesion Policy funds can already support investments in these areas, in synergy with other EU, national and local funding instruments.

What is the Demography Report?

The Commission's 2023 Demography Report presents the drivers of demographic change and their impacts across Europe, updating and developing the Demography Report issued in 2020. It discusses both firmly established long-term trends and more recent developments caused by sudden crises such as Brexit, the COVID-19 pandemic, and the Russian aggression against Ukraine.

This follow-up Report confirms the horizontal nature of the demographic transition. Demography underpins virtually all policies and requires that policymakers at all levels cooperate and coordinate to inform and engage a variety of stakeholders. It is precisely this multi-dimensionality of demography that presents an opportunity for the EU to be a forefront runner in this field.

What are the main issues covered by the report?

The Report presents various long-term demographic trends with respect to life expectancy, mortality and migration and their impacts on population ageing, household composition, trends in the labour market, territorial cohesion and poverty and social exclusion.

The Report analyses the policy challenges stemming from these trends   for policy makers at EU, national, regional, and local levels. It also identifies the benefits and opportunities these trends offer certain sectors of the economy and of society.

What are the main impacts of Brexit, the COVID-19 pandemic, and the war in Ukraine on established demographic trends?

The report outlines that the United Kingdom's withdrawal from the EU led to an increase in the number of EU citizens leaving the UK to return to their home countries, especially in Central and Eastern Europe.

COVID-19 caused an observable decline in life expectancy and fertility rates in the EU, but it seems that past trends in these areas have since resumed. The COVID-19 pandemic also led to a large drop in migration flows, although this trend has been reversed since.

The war in Ukraine and the large flow of refugees may also have significant consequences for the demography of both the EU and Ukraine.

Finally, in recent years, several countries have also experienced ‘counter-urbanisation' trends as more people move to rural areas with good transport connections and social services. The pandemic may have accelerated this trend, but it remains to be seen whether it will continue in the future.

The Report also discusses the impact of demographic change and the challenges it brings for policymakers. What are these challenges?

These challenges include an ageing population, a shrinking working-age population and population decline more generally.

However, the fact that people nowadays live longer and healthier lives than previous generations is a remarkable societal achievement in and of itself. As our labour markets adapt to the new reality, this fact also brings more opportunities for active ageing and continued personal development and can initiate positive economic dynamics, for example in the silver economy and the tourism industry.

Demographic divergences between regions can worsen existing economic and social divides. Some, predominantly rural and less developed, EU regions are experiencing an accelerated reduction of their working age population and lag behind in developing, attracting and/or retaining the skilled workers needed for their development. This combination of challenges may impede their capacity to build sustainable, competitive, and knowledge-based economies, and puts them at a higher risk of failing to catch up with more advanced regions.

What are the key statistical findings of the report?

Key findings of the demography report include:

• As a result of the COVID-19 pandemic, life expectancy dropped from 81.3 years in 2019 to 80.1 years in 2021. In 2021, the life expectancy in the EU was estimated at 82.8 years for women and 77.2 years for men.
• In 2020, the average number of childbirths per woman was 1.5, which is well below the value of 2.1 required to maintain a stable population.
• On 1 January 2021, people aged 65 and above represented 20.8% of the EU population. By 2050, over 30% of the European population is expected to be over 65.
• The number of households in Europe has continued to grow, while the average household size has continued to fall. In 2021, the average European household consisted of 2.2 people, compared with 2.3 in 2019 and 2.4 in 2009.
• The pandemic may have encouraged more people to move to rural areas due to the more widespread possibility of working remotely. In 2021, almost every fourth person in the EU was working from home.

How does demographic change vary across the EU's regions?

Population decline varies significantly within countries. In 2020, 199 NUTS 3 (out of 1,166) in the EU had a shrinking population. In 2019, rural areas were losing more population due to natural change, and they were gaining fewer people through intra EU mobility compared with predominantly urban areas.

The population in rural areas of Europe is, on average, older than the population in towns, cities and suburbs. Certain regions of Eastern and Southern Member States are even confronted with both challenges: natural declines in population combined with departure of young people from rural to urban areas.

Moreover, young women are more likely to leave rural areas than young men. These demographic trends are coupled with a lack of connectivity, poor infrastructure, productivity challenges, and poor access to public services including education and care, and are indicative of the lower attractiveness of rural areas as places to live and work.