The European labor market has undergone significant changes in recent years compared to the pre-pandemic era.

A study by the European Central Bank, which surveyed 46 large non-financial corporations, identified five key characteristics of the labor market in recent years:

1. Difficulty finding workers, particularly skilled ones

2. Increased employment despite stagnant economic activity and, consequently, reduced productivity

3. A significant reduction in working hours per employee

4. The rise of remote work

5. The use of generative artificial intelligence (AI)

The businesses surveyed were asked whether these characteristics applied to them, and, if so, why. Over 90% agreed that finding workers has become more difficult compared to 5-10 years ago. Among this 90%, a large percentage cited a lack of workers with the necessary skills, while slightly less than 50% said there is a general labor shortage, regardless of skills. For 60% of businesses, attracting workers with the required skills has become more challenging due to prevailing wage levels.

More than one in three respondents mentioned that their companies prefer to retain employees when business conditions worsen, and almost all attributed this to the anticipated difficulty of finding personnel once the business environment improves. However, about half of the companies believe there are additional reasons for maintaining their workforce. One in three noted that an expected rise in retirements in the near future, combined with current profitability, allows them to keep their employees. Furthermore, one in five respondents indicated that the reduction in real wages served as an incentive to maintain employment levels.

Approximately one in three businesses reported a reduction in working hours per employee, attributing this largely—at least in part—to the preferences of the employees themselves. A smaller proportion of companies (two out of three) attributed the reduction to employee absenteeism, while only one in three said the reduction was due to company preferences.

Regarding remote work, it is clear that its usage has become widespread, with over 80% of businesses agreeing that it expands their prospects for attracting workers. Around half of the companies reported that remote work has allowed them to reduce office space and related fixed costs, while only one in four agreed that it lowers employees' wage demands. For four out of ten companies, the increase in remote work has negatively impacted their productivity, with a similar proportion stating that they plan to limit remote work in the future. Conversely, three out of ten companies have not observed a drop in productivity due to remote work.

The use of generative AI has also become embedded in business operations. Nearly three out of four respondents said they are already using it. Most companies began adopting AI in 2023, albeit on a limited scale, with about half reporting that less than 10% of their employees used it at least once a week.

As for the motivations behind AI adoption, the top reason cited was improving employees' access to information, considered important or very important by over 90% of companies. A slightly smaller percentage said they aim to use AI for content generation, software development, and customer interactions.

For about half of the companies, reducing their workforce was also a significant motivation for adopting generative AI. Additionally, many respondents noted that AI is still in an experimental phase, with businesses seeking to identify areas where it can be used to boost productivity, quality, and efficiency.