This chapter investigates the extent to which the economies of EU member states are likely to encounter aggregate skill imbalances by the year 2020, and assesses the necessity of appropriate policies (e.g. activation, migration) for addressing such imbalances. The baseline projections of Cedefop’s European skills forecasting model are used to examine the nature of anticipated discrepancies between the supply and demand for labour in EU member states. The chapter subsequently examines the implications for “sustainable” activity rates based on the counterfactual hypothesis that all EU countries will meet their headline EU 2020 employment targets. The results highlight that meeting the respective EU2020 employment targets is dependent on considerable activation efforts by several EU member states, which will have to outweigh existing policies. To meet employment targets with shrinking populations at natural rates of unemployment, European policy makers will have to rely on a menu of policy choices to increase activity rates by about 4.3 percentage points on average in the EU economy. This may entail the activation of a significant share of the currently inactive EU population, or a reliance on migration and other socio-demographic policies to ensure that the future supply of labour will be sufficient to meet skill needs.