Empowering the Workforce in the Context of a Skills-First Approach

Executive summary

Labour markets across OECD countries are undergoing significant transformations due to technological advancements, demographic shifts, and the increasing importance of jobs driving sustainability. These changes are reshaping skill demands and how skills are recognised. Traditional hiring models, often reliant on formal credentials, are being reassessed as employers and policymakers explore alternative ways to expand and diversify the talent pool and better match people with emerging job opportunities.

This report analyses the evolving labour market landscape, examining how skills are signalled, how hiring practices are changing, and which policy actions can support a labour market that better connects individuals with job opportunities. While greater emphasis on skills offers potential for improved job matching and adaptability, the transition also brings challenges that need careful attention.

Individuals are increasingly signalling their skills to enhance their employment prospects

Job seekers are actively signalling their skills to improve visibility to employers. Digital platforms, particularly professional networking sites, have played a key role in this shift, enabling individuals to highlight technical and transversal skills. Employers, in turn, have more information to assess candidate suitability.

Skills signalling – defined as individuals explicitly communicating their skills through means such as professional networking sites, by listing their skills or through peer endorsements – is growing across OECD countries. It is most common among younger individuals, professionals in digital and business sectors, and those with higher education. In 2023, the likelihood of someone adding skills on such platforms (3.2%) was double that of 2018 (1.5%). The average number of skills signalled also rose from 10 in 2018 to over 12 in 2023.

Skill signalling patterns vary by demographic group. Women are more likely to showcase digital skills, while men more frequently signal skills linked to green jobs. This may reflect both labour market positioning and attempts to counteract common stereotypes – for instance, women might emphasise digital skills to demonstrate competencies in areas where they are often underrepresented or perceived as less proficient. Signalling appears particularly beneficial for individuals without formal qualifications, as analysis shows that adding more skills to online profiles is associated with shorter employment gaps, especially for those with lower education levels. However, its effectiveness varies across labour markets and sectors.

Despite its potential, access to skills signalling is uneven. Educational attainment remains strongly correlated with the number of skills signalled: in 2023, those with a master’s degree or higher signalled over 14 skills on average, compared to about 11 among individuals with less than upper secondary education. Gaps in access to skills validation tools, digital proficiency, and employer recognition of non-traditional credentials may suggest that not all individuals can benefit equally from the opportunities that skills-first practices offer. Addressing these disparities requires clearer, more standardised systems for recognising and verifying skills – ensuring employers can communicate the skills they seek, individuals can effectively signal theirs, and that job seekers don’t experience any additional barriers.

Skills-based hiring is expanding, but implementation challenges remain

Many employers are shifting hiring practices to emphasise demonstrated skills over formal qualifications. Across OECD countries, recruiters most often searched using skills criteria, with 14% of LinkedIn searches filtering skills only and 1% filtering both skills and degrees. This pattern is partly driven by labour shortages in key industries, encouraging employers to relax degree requirements and improve candidate assessment using skills tests, microcredentials, and digital certifications.

Nevertheless, uneven adoption of skills-first hiring practices remains an issue. While large companies and public sector institutions have led by eliminating degree requirements for certain roles, small and medium-sized enterprises (SMEs) face more obstacles due to limited human resources and capacity. Employers also vary in how much they trust skills signals – particularly when they originate from non-traditional sources.

A recent World Economic Forum survey found that fewer than 20% of employers had removed degree requirements to expand talent pools. Of the employers surveyed, 47% aimed to reach more diverse candidates, and 62% expressed interest in providing reskilling and upskilling opportunities. This points to a growing willingness to apply skills-first practices across the full employee lifecycle – not just hiring.

A stronger focus on skills presents both opportunities and risks for job seekers and employers

Placing greater emphasis on skills in hiring and workforce development can expand access to jobs, improve recruitment outcomes. It can also help identify talent among individuals whose skills were developed through alternative learning – such as online courses, workplace training, or non-formal programmes.

However, this transition is not without risks. Poorly designed skills assessments or algorithm-driven recruitment tools could perpetuate or amplify bias. Focusing too narrowly on current skills needs may also reduce long-term workforce adaptability, especially if there is inadequate support for continued learning.

Another concern is that growing reliance on skills-based practices could weaken worker protections. Employment rights and regulations are often tied to job classifications based on formal qualifications. Moving away from these structures may affect workers’ ability to negotiate fair conditions and wages.

Whether skills-first practices lead to long-term benefits for both employers and workers depends on how well they are implemented. Effective integration with education systems and a strong focus on equity and inclusion will be crucial to avoid reinforcing existing inequalities.

A co-ordinated effort from public and private actors is essential to support skills-first transitions

While governments play a central role, the success of skills-first transitions depends on co-ordinated efforts from employers, training providers, social partners, and civil society. This report identifies policy priorities where governments can lead – often in partnership with other actors – to support the broader adoption and effectiveness of skills signalling and skills-based hiring:

• Standardising skills validation to improve trust and comparability. Governments can promote clear and consistent frameworks to recognise and assess skills – including alternative credentials such as micro-credentials and digital badges – to increase employer trust and ensure recognition across sectors.

• Investing in digital and lifelong learning to ensure equitable access to skills development. Expanding learning opportunities across all stages of life is essential, particularly for individuals with limited access to traditional education. Governments should support flexible, work-based, and inclusive learning models, while employers and providers ensure relevance and quality.

• Enhancing labour market intelligence to guide decisions. Improved data on workforce trends, skills demands, and outcomes from skills-based hiring can help policymakers and employers make more informed decisions, while supporting job seekers in aligning their development with market needs.

• Leading by example in public sector hiring. Public institutions can model best practices by removing unnecessary degree requirements and prioritising skills-based recruitment, reinforcing trust in this approach and encouraging broader uptake.