Are you looking for work but don’t have a university degree? While you might have been traditionally overlooked, the good news is that skills-based hiring is on the rise.
International studies reveal that in 2024, 81% of companies used skills-based hiring, up from 73% last year and 56% in 2022. The trend has seen many US state governments eliminate the college degree requirements for public sector roles.
In Australia, the rise of skills-based hiring has been especially significant, with 91% of employers using this method for recruitment.
So, why are employers increasingly focused on skills rather than qualifications?
Skills gaps
Many employers are turning to skills-based hiring due to difficulties in finding candidates with the skills they need.
A study by Hays revealed that 85% of hiring managers are grappling with skills gaps among their workforce. Skills that are especially lacking include:
• Technical skills
• Critical thinking: In an era when technology is taking over many roles, skills such as critical thinking are more important than ever.
• Leadership: Strong leadership is vital in most workplaces.
• Communication: Research indicates that many younger workers lack interpersonal and communication skills. This makes these skills especially sought after.
The lack of workers with the required skills has led some to question the effectiveness of the education system.
Hays Asia-Pacific CEO Matthew Dickason said at present the education system is not producing graduates with the skills that employers require.
“We need to question whether the education system is producing job-ready graduates at the pace that we need, and if not, why is that the case. Many industries continue to have skills gaps, and their needs aren’t being met despite a strong pool of graduates,” he told The Australian.
Improved satisfaction
Studies show employers who assess candidates based on their skills as well as formal qualifications are more satisfied with their hires. Among the benefits seen by employers who adopted skills-based hiring were:
• Improved employee retention: 94% of employers who used skills-based-hiring said it had improved employee retention.
• Improved workforce diversity: 94% of employers said skills-based hiring had enhanced the diversity of their workforce.
• Reduced mis-hires: 91% of employers say that adopting skills-based hiring has reduced their number of mis-hires
• Reduced cost to hire: 83% of employers said adopting skills-based hiring had reduced the costs associated with hiring.
What does this all mean?
For employers, shifting to a skills-based method of hiring isn’t without its challenges. Over half of hiring managers report identifying and assessing the skills of prospective employees is a major challenge. Some managers struggle to identify the skills required for the roles they are hiring for.
For employees, university education still has an important role to play. 59% of employers say that university qualifications play a critical role in hiring decisions. In addition, those with university degrees still earn, on average, more than those without.
However, it is important jobseekers and those looking to change careers prioritise obtaining skills as well as qualifications. This could involve undertaking internships or volunteering in an area of interest.
Overall, employees welcome the shift towards selecting candidates based on skills. 81% say they have gained new employment because of skills-based hiring. Meanwhile, 85% say that it provides them the opportunity to develop their skills.
For those with a well-developed skill set, endless opportunities are available, regardless of qualifications.
Are you looking for a new role? Public Service Resumes can help. We are pleased to offer various services, including career development coaching and interview skills coaching.
Article References
Bell, M (10 February 2025) ‘Australia’s skills crisis: Why businesses are struggling to find the right workers’, The Australian, accessed 24 March 2025.
Campbell, J (6 June 2024) ‘Australia leading the charge in skills-based hiring: What are the benefits?’, HR Leader, accessed 24 March 2025.
White, S (23 March 2024) ‘How Skills-Based Hiring Is Expanding Opportunity For All’, Forbes, accessed 24 March 2025.