Feb 8 • Stefan Gauci Scicluna

Recognition of Qualifications in the EU

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Is Europe Paying an Economic Price for Fragmentation?

The European Union presents itself as a space built on freedom. Freedom of movement, freedom to work, freedom to provide services across borders. In theory, a qualified professional in one Member State should be able to move to another and continue practising their profession with minimal friction. In reality, this is often where the promise of the Single Market quietly breaks down.

The recognition of professional qualifications remains one of the most persistent structural weaknesses of the EU Single Market. It is often treated as a technical or administrative issue, yet its consequences are economic and far-reaching. At stake are labour mobility, productivity, competitiveness, and ultimately Europe’s long-term growth potential.

The EU has long acknowledged the problem. Legal frameworks and directives on the mutual recognition of professional qualifications were designed to ensure that skills acquired in one Member State could be recognised in another. However, implementation remains largely national, fragmented, and discretionary. Recognition procedures vary widely across countries, many professions remain tightly regulated under historical or guild-based systems, and professionals are frequently asked to sit additional exams, retrain, or undergo adaptation periods even when their qualifications are broadly equivalent.

As a result, mobility exists in law but often fails in practice. This gap is particularly visible in skilled trades, healthcare professions, engineering, architecture, and other regulated services. These are precisely the areas where many European economies face shortages, yet the system continues to block or delay qualified professionals from filling those gaps.

This fragmentation creates a labour market paradox that should not exist in a genuine single market. Across Europe, some countries struggle with acute skills shortages while others have highly qualified individuals working well below their level of training. Restrictive recognition systems play a direct role in this mismatch. When professionals are unable to practise their profession abroad, many accept lower-skilled jobs, withdraw from the labour market altogether, or decide that mobility is simply not worth the administrative and financial cost.

From an economic perspective, this is a clear case of misallocation of human capital. It is one of the most damaging inefficiencies an advanced economy can sustain, particularly at a time when Europe faces demographic ageing and intensifying global competition.

The economic cost of non-recognition rarely appears explicitly in public budgets, but it is visible in weaker performance across the economy. When skilled professionals cannot practise, their productivity declines and firms lose access to talent they urgently need. Innovation slows, service quality suffers, and growth potential is quietly eroded.

Labour mobility is also weakened. One of the EU’s key economic strengths is its ability to absorb regional shocks by allowing workers to move where opportunities exist. Barriers to qualification recognition undermine this adjustment mechanism, making the European economy less flexible and more vulnerable during downturns or periods of structural change.

At the same time, restrictive recognition systems reduce competitive pressure. By limiting entry into professions, they protect incumbents and keep prices higher for consumers. In economic terms, this amounts to regulatory protectionism operating inside what is supposed to be a single market.

The scale of the missed opportunity is significant. Services account for roughly three quarters of the EU’s GDP and around two thirds of total employment. Studies consistently show that internal barriers to services trade are economically equivalent to very high tariffs. Even modest reductions in these barriers could generate hundreds of billions of euros in additional output each year. Qualification recognition is not the only obstacle, but it is among the most persistent and politically protected.

This raises an uncomfortable question about who benefits from the status quo. National governments often justify restrictive systems by pointing to quality assurance, consumer protection, and professional standards. Yet in many cases the practical effect is to shield domestic professionals from competition, preserve legacy structures, and maintain national control over access to professions. The tension between national interests and European economic interests is clear, and so far national systems have largely prevailed.

There is also a deeper question that is rarely addressed directly. If a professional is genuinely incompetent, why would the market not respond accordingly. In most service sectors, poor quality leads to loss of clients, reputational damage, and eventual exit from the market. Overreliance on bureaucratic recognition substitutes administrative control for market discipline, often at significant economic cost.

The strategic implications are difficult to ignore. At a time when Europe is concerned about lagging productivity, ageing populations, and competition from the United States and Asia, it is economically incoherent to voluntarily restrict the internal circulation of skills. While external trade agreements can deliver incremental benefits, the largest untapped growth potential lies within Europe itself in completing the Single Market for services and skills.

A more rational system would not require radical deregulation. It would mean automatic or near-automatic recognition of equivalent qualifications, EU-wide digital verification of credentials, and narrow exceptions only where public safety is demonstrably at risk. Above all, it would require genuine mutual trust between national education and training systems. Such an approach would not lower standards. It would strengthen economic performance.

The failure to fully recognise qualifications across the EU is therefore not a minor administrative flaw. It is a drag on productivity, a barrier to labour mobility, and a hidden tax on growth. For a continent seeking competitiveness, resilience, and strategic autonomy, leaving this problem unresolved is an economic luxury Europe can no longer afford.

The question is no longer whether Europe should act. It is whether it can afford not to.
If this resonates with what you are seeing in your organisation, feel free to comment or send a DM.

Looking to have a chat about this or continue the conversation? Find me on Linkedin here: https://www.linkedin.com/in/stefangauciscicluna/

Stefan Gauci Scicluna
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