The right skills and competences are required to reduce mismatches in the labour market and allow for a smoother reallocation of workers between sectors and firms. So far, investment in human capital development in Europe is insufficient. For instance, the number of European school-leavers who go on to complete higher education is inadequate for the knowledge-intensive economy.
In the euro area, only Finland and Ireland have reached a comparable level with the U.S. in this field. Human capital improvements in these countries came together with a fast development of the sectors within information and communication technologies. As a consequence, they enjoy a labour productivity growth performance which is significantly above the euro area average.