‘Skills-first’ hiring could widen Europe’s labour pool

To close the skills gap, businesses and policymakers have recently backed a ‘skills-first’ hiring approach, which evaluates job applicants based on their abilities instead of traditional education or certification.

Europe is still enduring labour shortages three years after the onset of the pandemic, data released last month from the European Trade Union Institute shows, though even prior to 2020, economies undergoing digital and green transitions showed a deficit of skilled hires available.

“There are large pools of talent that remain underutilised or even wasted,” European Commissioner Nicolas Schmit said at a European Year of Skills event in May.

Data from a 2013 study on EU skills shortages by the Centre for the Development of Vocational Training shows that four in ten employees feel their skills are underutilised in their position. The same percentage of European employers claim to struggle to find qualified hires.

According to the theory’s logic, businesses using skills as the primary hiring metric, as opposed to qualifications and prior work experience, enables them to connect with capable workers who would normally be siloed off in other fields.

Schmit spoke in favour of skills-first hiring, adding that such a hiring model “fits well into our policy framework”.

New metrics

A recent study released by LinkedIn argues that skills-first hiring can widen Europe’s labour pool and increase opportunities for often overlooked workers.

LinkedIn’s report claims that with skills-first hiring, European businesses could see a six-fold expansion of their hiring pool, on average. These numbers fluctuate based on sector and member state.

LinkedIn calculated these figures by assigning common skills to job titles, such as a digital marketing manager requiring the skills: “web analytics”, “online advertising”, and “digital marketing”.

Using data gathered through their hiring platform, LinkedIn saw which job titles shared similar self-reported skills. For example, the digital marketing manager would share “e-commerce” and other skills with a retail business manager.

“Often the criteria we use when we’re recruiting for a job is ‘show me the workers who’ve had the same job before’,” said Sue Duke, Head of Global Policy for LinkedIn at a European Year of Skills event in May, “but change that criterion to ‘show me all the workers who have the relevant skills to do this job’, and that skills-first approach puts six times as many workers in front of you.”

LinkedIn is not the only multinational pursuing skills-first hiring. For the last decade, IBM has been using a skills-first approach for their internal hiring, a strategy the company says was developed to counter chronic labour shortages in the tech sector.

Almost all of IBM’s positions initially required a bachelor’s degree, at minimum.

“A couple of years ago, we did a review of every single job role in IBM to see whether it did need a tertiary qualification of some kind,” David Barnes, Vice President of Global Workforce Policy at IBM, told EURACTIV.

Now, just over half of the European job postings for IBM still require a college degree. Applicants are still tested on their self-reported skills, but according to IBM, employee performance is essentially equal between skills-first hirees and hirees with formal qualifications.

“Some of them are reentering the workforce,” Barnes said, “But you know they are coming from all kinds of backgrounds. We are hiring baristas, we are hiring gamers, hackers, nurses, hair stylists, military veterans.”

“Democratising” hiring

From multinationals to organised labour, many stakeholders believe skills-first hiring has the potential to work around an entrenched hiring culture that excludes certain workers.

LinkedIn’s report highlights three groups that see higher levels of recruitment under a skills-first approach: women, young workers, and workers without formal degrees.

“If you go on LinkedIn today and you search for Engineering Leads in Germany, base your search on previous job title, and just 14% of your candidates will be women,” Duke said, “but base your search on qualifying skills and 35% of your candidates will be women.”

“We cannot lock seven out of every 10 workers out of opportunity, just because they don’t have the right piece of paper,” Duke said regarding the percentage of workers without degrees, “skills are skills no matter how you acquire them”.

Formal qualifications and formal benefits

While voices for organised labour largely support businesses upskilling their workforces, concerns were raised about how benefits schemes would survive in a world where skills-first hiring was the norm.

Ludovic Voet, Confederal Secretary for the European Trade Union Confederation, emphasised that many collective agreements across Europe use workers’ qualifications to set wage and benefit scales. He told EURACTIV that unions fear the eventual formation of tiers of workers, where those with formal qualifications have traditional protections, and those hired based on their skills do not.

In the case of IBM however, the differences between their hires end at the interview table, according to the company.

“We pay these people exactly the same as their colleagues who have a degree and are in the same job role,” IBM’s Barnes said.

Microcredentials

Unlike formal qualifications, skills-first hiring requires employers to have a certain amount of faith in the skills hires report to have. Businesses have recommended allowing workers to certify their abilities with short training courses, creating ‘micro-credentials’.

The EU Council released its recommendation on Microcredentials last year, which sought to somewhat standardise credentials across member states and between public and private training providers.

“Now, if we are going to move towards a skills-first approach. The biggest need will be a common skills taxonomy,” Saadia Zahidi, Managing Director for the World Economic Forum, said at a European Year of Skills event in June, “We all have to be talking the same language.”

Both LinkedIn and IBM recommend that the EU commits further to supporting micro-credentials.

It will take years to show if skills-first hiring can help close the skills gap, but while it might make for more efficient hiring and help increase the talent pool, the approach cannot create coders, builders, and carers out of thin air.

[Edited by Alice Taylor/János Allenbach-Ammann]

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