Skills Gap between Eastern and Southeastern Europe SMEs and their North-Central, Western, and Northern European Counterparts: The Role of Financial, Institutional, and Demographic Contexts

The disparities in skills between Eastern and Southeastern European countries compared to those in North-Central, Western, and Northern Europe have emerged as a critical issue that significantly impacts the operational efficiency of firms within these regions. This contrast becomes markedly more pronounced when examining small and medium-sized enterprises (SMEs). The underlying rationales for these disparities can be discerned within the historical and cultural legacies of these regions, the divergent economic and production paradigms embraced by countries in these respective zones, as well as the varying degrees of financial stability present at both the business and state levels. Further accentuating the distinction is the variance in Human Resource Management (HRM) strategies and focal points across these regions. In this chapter, we not only focus on and highlight this aspect, but also seek to clarify some of the contributing factors that originate from the financial and the institutional domains, with a particular emphasis on the challenges related to accessing financial resources. It is essential to recognise the multifaceted nature of this issue and to address the underlying causal factors proactively. Collaborative efforts among governments, businesses, and international bodies are pivotal in devising strategies that can mitigate the skills gap, enhance education and vocational training, foster innovation ecosystems, and facilitate improved access to finance. By addressing these root causes comprehensively, the disparities in skills can be bridged, leading to a more balanced and equitable landscape of economic development across the diverse regions of Europe.