European competitiveness: developing AI skills at scale

March 2026  |  FEATURE | LABOUR & EMPLOYMENT

Financier Worldwide Magazine

March 2026 Issue

As artificial intelligence (AI) continues its rapid global deployment, the need for skilled personnel who can adopt and leverage the technology across disciplines is rising accordingly. Across Europe – widely perceived as less effective than the US and China at attracting and retaining AI talent – advancing AI technologies are generating strong demand for associated skills and expertise while redefining the nature of work across the continent.

According to the European Commission’s (EC’s) November 2025 report ‘Shaping and strengthening European AI talent’, AI talent – whether professionals directly employed in AI-related roles or those using AI skills in other fields – more than doubled in the European Union (EU) between 2016 and 2023, now representing 0.41 percent of the EU workforce.

The EU’s reputation as an AI education hub is aiding this upsurge in skills, with 35 percent of all AI-related Master programmes globally offered by its universities and research centres, and Germany, France and the Netherlands at the forefront.

“The AI talent pool in Europe is on a par with that of the US and China in terms of skills and capabilities,” says Narasimhan S L, chief human resources officer at Acuity Analytics. “This availability of AI skills is built on the region’s very strong foundations of education strength and science, technology, engineering and mathematics (STEM) legacy, which produce high-quality expert professionals.

“There is also a start-up ecosystem which enables talent to thrive,” he continues. “Portugal, Bulgaria, Malta, and the DACH region countries of Germany, Austria and Switzerland, are good examples of the depth of AI-related capabilities that exist across the continent.”

Several EU member states, including France, Luxembourg, Finland, the Netherlands and Germany, are increasingly designated as AI talent hubs, fuelled by a steady stream of highly skilled graduates working alongside major industrial companies and numerous smaller businesses and start-ups. Strong policies, digital infrastructures and international openness are also supporting AI talent attraction in Ireland and Estonia.

Despite this progress, global competition for AI talent remains fierce. Developing, attracting and retaining AI talent – and scaling AI literacy more widely – is a defining challenge for Europe’s long‑term competitiveness.

Investment and initiatives

Amid an intensifying global AI race, growth in AI talent across Europe has been rapid, and formerly lagging regions such as Greece, Portugal, Spain and Italy, as well as parts of Eastern Europe, are now joining that race.

To strengthen their AI talent pipelines and ecosystems, countries are investing heavily in research networks, PhD programmes and cutting‑edge computing resources. France announced more than €100bn in AI-related investment commitments at its AI Action Summit in February 2025, focused on infrastructure, data centres and talent. Germany has permanently funded a network of national AI Competence Centres, consolidating excellence and visibility in AI research. Analyses of Portugal’s skills agenda indicate that up to 1.3 million workers – around 30 percent of the workforce – may need retraining by 2030 to fully harness generative AI and close the productivity gap with the EU average.

“European education is highly sought after, and when coupled with forward-looking initiatives, leads to strong talent growth,” affirms Mr S L. “Talent migration within the EU is also a tremendous advantage, allowing organisations to leverage diverse perspectives very effectively.”

Providing additional support is the EC’s Apply AI Strategy. Building on the AI Continent Action Plan launched in April 2025 to boost infrastructure, data access, AI adoption in industry and skills while simplifying regulation, Apply AI – announced in October 2025 – is designed to accelerate adoption and integration of AI in key strategic sectors, and includes measures to enable an AI-ready workforce.

The EU’s policy framework also embeds AI literacy obligations in the AI Act, requiring providers and deployers to ensure sufficient AI literacy for staff dealing with AI systems. Complementary initiatives include a living repository of AI literacy practices and support for sectoral experts with multidisciplinary profiles. An EU‑funded AI Skills Academy is planned under the broader Union of Skills framework, with programmes and pilots developing through 2026.

Another reason AI talent is growing in Europe, in the view of Tom Stevenson, founder and chief executive of Pynea, is because it is no longer limited to specialist roles. “It is becoming a baseline capability across product, marketing, operations, finance, law and industry, which is why growth is spreading beyond traditional hubs,” he contends. “Where work shows up, people learn quickly and stay.

“The biggest accelerator is company gravity,” he continues. “AI tools such as Lovable and n8n show the kind of breakout momentum Europe needs more of, proving that globally relevant products can be built here and still move fast.”

The EC’s report calls for further alignment between national and EU‑level strategies to ensure initiatives reinforce a shared European vision – coordination that would strengthen Europe’s collective competitiveness while allowing each region to build on its own strengths.

Extant and emerging challenges

While concentrated in AI skills, Europe faces several challenges. One concern is the gender gap, with women representing less than one quarter of AI engineers across Europe and as little as 11 percent in some cities. Closing this gap will require stronger STEM education pathways, mentorship opportunities and inclusive workplace cultures.

Europe’s AI workforce is unevenly internationalised. While the EU attracts many foreign‑trained professionals, most talent inflows concentrate in a handful of countries, notably Germany, which issued nearly 78 percent of all EU Blue Cards in 2023 – indicating untapped potential elsewhere to attract skilled workers from third countries.

Sector‑specific challenges include those facing AI‑intensive sectors central to the EU economy. In healthcare, there is a dual challenge of bridging gaps in basic digital skills while developing advanced AI competencies. In energy – a sector particularly affected by an ageing workforce – a large share of workers require upskilling as AI reshapes roles. In advanced manufacturing, applications depend on local industrial data that are often inaccessible, requiring hybrid AI‑industry profiles. In cultural and creative industries, the integration of AI into content creation, immersive experiences and data‑driven business models is compelling artists and creatives to invest in new skills.

Sectors with high exposure to AI are already reporting faster economic growth, suggesting that adoption is fuelling job creation rather than displacement. Nevertheless, by 2030, up to 6.5 percent of the EU workforce may need to transition to new occupations if AI is adopted at pace, and companies will face growing skill mismatches as demand rises for advanced IT, data analytics and scientific research alongside critical thinking, creativity, adaptability and entrepreneurship.

Regulatory complexities, limited access to data and investment, and market fragmentation across member states remain part of the mix, while scaling frictions such as less risk capital, constrained access to serious compute, slower enterprise procurement and cross-border complexity can hinder momentum.

Competing with the big boys

Competing to develop, attract and retain European AI talent is a global challenge that demands coordinated efforts across the region to build an ecosystem as dynamic and attractive as those of the US and China.

While Europe’s AI talent pool is large and sophisticated, two structural problems persist at the top end of the market. “Europe has fewer STEM graduates per capita than the US and a persistent ‘brain drain’ of top researchers and engineers to US‑based technology companies and labs,” observes Mike Gillespie, chief executive of Advent IM Ltd. “The US hosts the majority of leading AI institutions, produces most of the notable frontier AI models, offers substantially higher remuneration packages and has deeper capital markets.”

In order to compete with the big boys – the US and China – the consensus is that Europe must retain AI talent at the very top end. “When people want frontier scale, larger budgets, faster iteration cycles and serious compute, the US remains the default, because the frontier labs and capital concentration are unmatched,” affirms Mr Stevenson. “China’s advantage is speed, coordination and execution at scale. Europe’s opportunity is to build more breakout companies, so elite talent stays.”

To that end, three critical issues need to be resolved: the overall level of risk‑tolerant investment, the pace at which energy and infrastructure constraints are addressed, and the ability to offer top talent competitive career prospects relative to US and Chinese technology giants.

“Unless Europe can support more frontier‑scale projects, a portion of its most ambitious researchers and engineers will continue to move abroad,” he adds.

Evolving AI ecosystems

Europe stands at a pivotal moment. Opportunities exist to turn an expanding labour pool into elite AI talent, transform former peripheral regions into strategic assets in the global tech race and compete with current AI superpowers.

“We foresee the evolution of regional AI clusters built around distinct strengths, such as industrial AI and automotive applications in the DACH region, engineering hubs with algorithmic innovations in Eastern Europe or green AI in the Nordics,” asserts Mr SL. “There will also likely be increasing partnerships with academia to mirror the creation of applied research hubs in the US and China.

“Additionally, Europe’s evolving AI regulations will act as a differentiator, becoming a global benchmark for ethical AI, thereby attracting compliance and trust-led businesses,” he continues. “Europe has the right ingredients, including STEM strength, policy support and growing investment.”

Ultimately, the aim is to establish Europe as a first port of call for companies seeking AI talent. “I expect Europe’s AI ecosystem to become more connected and more execution led, moving from isolated pockets to stronger corridors between universities, start-ups, scale-ups and enterprises,” says Mr Stevenson. “Europe can turn its expanding labour pool into elite talent, but only if the environment feels like the best place to build.

“That means easier access to compute for start-ups, more founder support for rapid experimentation, faster routes into enterprise customers, and less friction when hiring and scaling across borders,” he continues. “Education should assume AI tools are used, then raise the bar to teach judgement, creativity and problem solving. Europe can also win by leading on trustworthy deployment, where reliability beats hype.”

In an increasingly automated and AI-driven world, Europe’s future workforce must be equipped to compete in a demanding global AI talent market – developing, attracting and retaining people with the requisite skills to drive the AI future while strengthening Europe’s collective competitiveness.

Europe now stands on the threshold of a decisive transformation. As AI reshapes global economic structures, the continent’s ability to cultivate, attract and retain talent will define its competitive trajectory for decades to come.

The region has clear strengths in education, research excellence and regulatory leadership, yet these alone will not secure long‑term success. Europe must accelerate investment in frontier‑scale capabilities, foster environments where start‑ups can scale rapidly, and ensure that workers at every level possess the digital and analytical skills required in an AI‑driven economy. Strengthening cross‑border collaboration, simplifying market access, and addressing structural barriers such as talent mobility and infrastructure capacity will be essential.

If Europe can combine its values‑driven approach with greater agility, ambition and strategic coherence, it has the potential not only to participate in the global AI revolution but to help shape it, ensuring sustainable competitiveness and inclusive growth across the continent.

© Financier Worldwide

BY

Fraser Tennant