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OECD Skills Studies: Empowering the Workforce in a Skills-First Approach

Core Content

The OECD Skills Studies report, Empowering the Workforce in the Context of a Skills-First Approach, explores the evolving role of skills in the global labour market. It highlights the increasing shift from traditional credential-based hiring to a skills-first model that prioritises demonstrated competencies over formal qualifications. This transition is driven by major economic and societal changes, including the digital, green, and demographic transitions, which are reshaping job requirements and workforce dynamics.

Main Viewpoints

• Skills-First Approach: This model focuses on individuals' skills and competencies, regardless of how or where they were acquired. It aims to create more adaptable workforces, reduce skill shortages, and improve job matching.

• Skills Signalling: Individuals are increasingly using digital platforms to communicate their skills directly to employers. This includes listing skills, using peer endorsements, and leveraging microcredentials and digital badges. Skills signalling is particularly common among younger workers, professionals in digital and business sectors, and those with higher education.

• Labour Market Changes: Skills requirements are changing at an unprecedented pace, especially in the wake of the digital transition. In the U.S., 37% of the top 20 skills requested for the average job had changed over the previous five years, with many new skills emerging.

• Employer Practices: Many employers are adopting skills-based hiring, using skills tests, microcredentials, and digital certifications to assess candidates. However, adoption is uneven, with SMEs facing more barriers due to limited resources and capacity.

• Policy Role: Governments and other stakeholders must work together to support the skills-first transition. Key policy actions include standardising skills validation, investing in digital and lifelong learning, enhancing labour market intelligence, and leading by example in public sector hiring.

Key Information

• Skills Signalling Growth: In 2023, the likelihood of someone adding skills on platforms like LinkedIn was double that of 2018. The average number of skills signalled increased from 10 to over 12.

• Digital and Green Transition Impact: These transitions are driving demand for new skills, particularly in areas such as digital literacy, AI, and sustainability. Basic digital skills are among the fastest-growing skill groups in the U.S. and Western Europe.

• Gender and Age Differences: Women are more likely to signal digital skills, while men focus on green-related skills. Younger workers and those with lower education levels benefit more from skills signalling, as it is associated with shorter employment gaps.

• Employer Awareness: Only 20% of employers have removed degree requirements to expand talent pools, but 47% aim to reach more diverse candidates, and 62% are interested in reskilling and upskilling programs.

• Challenges: Despite the potential of skills-first practices, challenges include uneven access to skills validation tools, digital proficiency gaps, and employer skepticism about non-traditional credentials. These issues may reinforce existing inequalities unless addressed through inclusive and standardised systems.

• Data and Collaboration: The report uses data from LinkedIn and policy evaluations across OECD countries to provide an international perspective. It underscores the importance of public-private partnerships in developing high-quality, accessible training programs.

Implementation Considerations

• Standardisation of Skills Validation: Clear frameworks are needed to validate and recognise skills, especially alternative credentials, to build employer trust and ensure cross-sector and cross-country comparability.

• Lifelong Learning: Digital and lifelong learning must be prioritised to ensure equitable access to skills development, particularly for those with limited formal education.

• Labour Market Intelligence: Enhanced data on workforce trends and skills demands can help employers and policymakers make informed decisions, improving job matching and addressing skill gaps.

• Public Sector Leadership: Governments should model skills-first hiring in the public sector, removing unnecessary degree requirements and focusing on skills-based recruitment to build trust and encourage broader adoption.

Conclusion

The skills-first approach has the potential to enhance job matching, inclusivity, and workforce adaptability. However, its success depends on coordinated efforts between public and private actors, effective implementation, and a focus on equity and inclusion. The report provides actionable recommendations to support this transition and ensure that all workers can benefit from the opportunities it presents.