For emerging professions, such as jobs in the field of artificial intelligence or sustainability, labour supply does not meet industry demand. In this context of labour shortages, Bruegel explores whether employers are focusing more on individual skills than formal qualifications by analysing around one million online job vacancies in the UK from 2019 to 2022.
Findings indicate that ‘skill-based hiring’ has increased for AI and green roles, expanding the talent pool through flexible hiring practices. AI job demand grew twice as fast as average labour demand, with university education mentions dropping by 23 percent and skill requirements being five times higher. While university degrees no longer offer an educational premium for AI roles, AI skills have a 16 percent wage premium, similar to having a PhD. For green positions, the educational premium persists.
The study recommends addressing the novel skills demands by forecasting skills needs and leveraging alternative skill-building methods such as apprenticeships, on-the-job training, Massive Open Online Courses (MOOCs), vocational education, micro-certificates, and online bootcamps.
Governments and employers should collaborate to align education and training systems with emerging occupations, recognising skills acquired outside formal education to promote inclusivity and adaptability. By focusing on skills-based hiring, organisations can expand their talent pool and effectively tackle skills shortages in AI and green sectors.
The working paper is structured as follows:
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The first section provides background about the current labour market and about the paper
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The second section examines the dataset and the methodology used
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The third section analyses and compares the educational and skills requirements in the job vacancies and the wage premiums related to this
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The fourth section provides policy recommendations
Source: European Digital Skills & Jobs Platform
