Europe's Missing Worker

Across the Continent, good jobs go begging

It's 3 a.m. in the university town of Paderborn, Germany, and IBM is cruising for computer geeks. A crew from Stuttgart headquarters has descended on Computer Nacht, an all-night festival that's part trade show, part party. Never mind the hour or the persistent beat of hip-hop music: Bleary-eyed execs are pitching students on the merits of a career with Big Blue.

Such is the shortage of qualified computer professionals in Europe that a dozen companies, including Deutsche Telekom, Hewlett-Packard, and Dresdner Bank, also turned up at the event on Dec. 12. It's not hard to see why. Europe next year will have 1.3 million more IT jobs than qualified workers, according to International Data Corp. estimates. Pay for European IT professionals has risen an estimated 6% to 8% in the past year, double the rate for other professions, while salaries for the most sought-after positions have risen some 12%. And it's not just info-tech specialists who are in demand as Europe's economy gathers pace. Businesses are also clamoring for workers ranging from financial professionals in Frankfurt to construction workers in Amsterdam to London bus drivers.

None of this would be surprising in the U.S., where the worker shortage is a by-product of the boom. But what's puzzling--and disturbing--is that unemployment in Europe is just shy of 10%, compared with 4.1% in the U.S. While London's Heathrow Airport imports security guards from France because the local unemployment rate is close to zero, elsewhere in Europe, 15.4 million workers are idle. They lack the skills, the language, or the incentive to change. Supply can't connect with the demand. It's a deep structural problem that threatens to brake the region's recovery and its transition to an information-based economy. "You see people delaying deployment of new technology because the human resources are not there," warns Bernard Vergnes, Microsoft's chairman for Europe, the Middle East, and Asia.

WEB WONKS. The most acute shortage is for information-technology workers, the people who design and sell software, program and service computers, and manage corporate networks. There's been a shortage of tech workers for years, but it's growing worse as the Internet and the pressing need for network expertise spread throughout the economy. All businesses use information technology these days. "We're competing with our partners and the end users of our product" for IT workers, says Mike Couzens, senior director for marketing and training at Cisco Systems Inc. in Europe, which is hiring 150 people a month. "It's difficult for everybody."

In Germany alone, 300,000 highly paid IT jobs are going begging, IDC says. That in a country with 9.1% unemployment, some 4 million jobless. So dire is the need that IBM Deutschland pays its employees up to $4,200 if they find a qualified candidate. The company hired 2,500 new workers in 1999 in Germany and plans to hire just as many in 2000.

In Internet-crazy Britain, a Web-site specialist with one or two years experience can earn up to $64,000 a year. That's a 20% increase over the going rate 12 months ago. Pay for midlevel systems architects has been rising 10% to 12% a year, according to human-resources consultant Towers Perrin. That comes to as much as $120,000 before bonuses.

But Europe's tech companies aren't just looking for people who can write software code or design a Web page. Even more important, companies need employees who can work in a team with people from other cultures and who know about communication and marketing. They fault European universities for putting too much emphasis on technical knowhow and not enough on business skills. "How you get along with a customer isn't taught anywhere," complains Horst Nebgen, general manager of software maker Novell's German unit.

That's true in other industries as well. Deutsche Lufthansa has mounted a publicity drive to fill 2,000 jobs, mostly as flight attendants. There is no shortage of applicants, the airline says, but many lack qualifications such as fluent English and a positive attitude.

Labor bottlenecks are even worse in parts of Europe, such as the Netherlands or Britain, where unemployment has sunk to U.S. levels or lower. That has led to shortages even in blue-collar trades such as construction. United Pan-Europe Communications, the cable-service provider, is two months behind schedule in building a $30 million digital media center in Amsterdam because of an electrician shortage. "We just can't find workers," complains Craig D. Bury, engineering and technology director.

With Dutch unemployment at 3%, it's no wonder. But why not import workers from eastern Germany, where demand for construction workers has plunged 14% in the past year and overall unemployment is 18.3%? Answer: The workers have little incentive to come. Germany's unemployment benefits give workers up to 67% of their previous net pay. Since benefits last indefinitely, workers are reluctant to move or start a new profession.

LONDON CALLING. Still, there are some signs Europe's workforce is becoming more flexible. When London United Busways Ltd. had trouble finding drivers locally, it recruited in France, where unemployment is 10.6%, compared with 5.9% in Britain. Training for the 60 drivers included intensive English lessons.

It's also good news that young Europeans are starting to catch fever just like their U.S. peers. That translates into a new willingness to join fledgling companies. "Getting technical people to sign on is really difficult for startups," says Laurent Coppieters, co-CEO of Belgium's "But as people see what is happening with dot.coms, the situation is improving." Belgium and other countries are easing tax rules to make it easier to offer employees stock options. Even some hard-core unemployed people are retraining as IT professionals. In cooperation with local governments, Microsoft Corp. says it has schooled 10,000 jobless Europeans and 90% have found jobs working with computers.

Some people are eager to undergo retraining. Take Ullrich Freund, a 53-year-old Dresden resident. Freund, educated as an engineer, has switched careers twice since the end of communism cost him his job at a maker of optical equipment. Unemployed again after a position in the front office of a building company petered out, Freund says he'll do almost anything rather than sit at home. "I'll drive a taxi," he says. "I'd rather not, but if there's nothing else, sure."

Yet those are the exceptions. Many Europeans remain stuck in an obsolete economy: The German government subsidizes big factories but strangles startups with high taxes. Unemployed French-speaking Belgian steelworkers refuse to commute to jobs in the nation's Dutch-speaking half. Europe won't boogie to the New Economy until such attitudes change.