Professional services firm Marsh has analysed the risks facing Europe’s businesses over the coming period. According to the firm’s research, labour shortages now carry the highest risk rating, with a 62% likelihood in the next 24 months.
At a time when artificial intelligence is regularly cited as ushering a new era of mass unemployment, there has been a great deal of fear that there will not be enough work to go around in the near future. However, as governments across Europe tighten immigration rules – even as their populations age – some research now suggests there is a growing prospect of labour shortages in the continent.
The study from Marsh draws from insights from over 620 human resource and risk professionals across Europe. Outlining the most significant people risks facing organisations, the study finds that that labour shortages carry the highest risk rating score and a 62% likelihood of occurrence in the next two years, surpassing global averages.
This risk is particularly acute in sectors such as manufacturing, energy, retail, and construction, fuelled by demographic shifts, skills mismatches, and intensified competition for talent. At the same time, organisations are compounding this, by failing to help the staff they already have keep their skills up to date.
In Europe, 58% of organisations report advanced or transformative AI maturity, suggesting AI is already embedded across core processes. However, 40% of HR and Risk professionals are concerned that AI is being implemented without adequate training, and 35% cite potential employee resistance, driven by fears of job loss.
These workforce pressures are compounded by other high-priority risks. While cyber risk remains a top global concern, Europe’s unique landscape places labour shortages at the forefront, followed closely by inadequate cyber threat literacy and technology skills shortages. Rising health and benefit costs also remain significant, with more than half of respondents rating their impact as catastrophic or high.
“These findings show how tightly linked today’s people risks are – and how directly they impact resilience and performance – starting with labour shortages, Europe’s most critical risk,” said Tony Wood, Mercer Marsh Benefits leader for Europe.
“Organisations can take a strategic approach to attracting, retaining, and upskilling talent while strengthening workplace benefits and cyber resilience, so they can address labour market pressures alongside cyber and health risks and thrive amid ongoing uncertainty.”
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