On November 25th, the European Commission adopted a proposal for a Council Recommendation on Human Capital. This is the first-ever EU legislative act focused specifically on human capital: although not legally binding, the recommendation will seek to align Member States’ approaches to human capital development, by providing guidance in key areas such as education, employment and skills. 

The Commission’s proposal is driven by several structural challenges that hinder EU competitiveness, such as persistent skills shortages, mismatches with labour market needs, weak basic skills levels as well as rapidly rising demand for future-oriented skills. To address these challenges, the document identifies a number of actions, emphasising the need to prioritise skills needed in strategic sectors, reverse the negative trend in basic skills and mobilize public and private resources to be invested in workforce development. 

The proposed recommendation has significant implications for higher education. In particular, the document urges Member States to: 

• align higher education curricula with strategic sectors (e.g., green transition, healthcare, advanced manufacturing, biotech). 
• implement the necessary reforms to ensure that graduates possess skills aligned with labour market needs (e.g., increasing work-based learning and building stronger university-business partnerships). 
• expand access and increase attractiveness of STEM programmes, with a focus on high-quality teaching and research excellence. 
• reinforce the role of higher education institutions in lifelong learning and boosting digital skills. 
• increase investment in higher education, including performance-based funding, and support more strategic public-private investments in skills and research. 

The draft proposal will be submitted to the Council of the EU for its discussion and adoption.