The rise of skills-based hiring: What it means for HE

The global workforce is undergoing a profound transformation, with skills-based hiring (SBH) rapidly becoming the dominant recruitment paradigm. Skills-based hiring emphasises demonstrable competencies over traditional indicators like degrees, job titles or experience.

Employers now prioritise specific technical and soft skills, using practical tests, portfolio reviews and behavioural interviews to assess ability. The focus has shifted from where knowledge was acquired to what a person can actually do – whether learnt at university, bootcamp, through self-study or on the job.

By 2025, this shift is no longer a nascent trend but a firmly established approach gaining significant traction across both private and public sectors. It fundamentally alters how talent is identified, assessed and developed.

While its benefits in addressing talent shortages and fostering inclusion are clear, the practical implementation presents ongoing challenges for many organisations. This evolution also compels a critical re-evaluation of the role and value proposition of higher education in preparing individuals for a skills-driven labour market.

Why competency is the new currency

SBH originated in the 1970s-80s with competency-based models focused on skills rather than degrees but was limited initially. The 2000s saw growth as tech companies prioritised practical skills like coding, supported by portfolios and bootcamps.

In the 2010s, AI and data analytics improved alignment of skills with jobs, promoting more inclusive hiring by reducing reliance on degrees. By the 2020s, policies like the United States Executive Order 14170 and endorsements from IBM and Google helped mainstream SBH globally.

Technology-driven skill obsolescence and the need for adaptability have fuelled SBH’s rise. Dropping strict degree requirements broadens access to vocational and self-taught candidates. In the US, 81% of companies now use SBH, with many eliminating degree mandates by 2025.

Europe’s 2025 Union of Skills promotes upskilling and micro-credentials, supported by European Skills and Competences, Qualifications and Occupations for skill standardisation. Globally, SBH expands rapidly in AI and green sectors, increasing workforce diversity and addressing skills shortages, especially in regions with rigid degree systems.

Research from the Burning Glass Institute, Harvard Business School and OECD in 2024 shows SBH improves job performance, retention and wages. Organisations are shifting to flexible, skills-based roles that encourage internal mobility and lifelong learning.

What led to skills-based hiring’s rise?

Proponents argue that the rise of SBH stems from overlapping shifts in technology, labour markets and the changing value of traditional education.

As economies move from industrial to digital, employers increasingly seek agile, current skills – especially in technology, data, communication and problem-solving. Advances in AI, credentialing platforms and online learning have enabled modular, certifiable skills development outside universities.

Companies like Google, IBM and LinkedIn normalise hiring non-degree holders based on verified competencies, viewing skills as more predictive of job performance than academic pedigree.

Meanwhile, rising tuition fees and student debt – particularly in the US – have made higher education seem costly and outdated. SBH responds to these pressures by offering faster, affordable, targeted hiring in a skills-driven economy.

Some analysts argue that higher education has contributed to SBH’s rise by failing to evolve with workforce needs.

Many institutions have long relied on degrees for signalling rather than ensuring graduates have job-relevant skills. Efforts to modernise curricula, expand experiential learning or align with employer expectations have lagged – especially in underfunded or non-elite schools. This credibility gap prompts employers to seek clearer, practical indicators of capability.

At its core, this shift highlights tensions between market goals and higher education’s mission. Markets value speed, adaptability and measurable output, while universities promote depth, critical thinking and intellectual autonomy.

The market seeks immediate utility; universities aim for long-term understanding and civic development. SBH intensifies this conflict, urging universities to produce ‘job-ready’ graduates with market-relevant skills – sometimes at the expense of broader humanistic learning.

What does it mean for higher education?

SBH signals a fundamental shift in how talent is recognised and valued, one that higher education must understand not as a threat but as a redefinition of its societal role. Rather than viewing this trend as displacing traditional degrees, universities should see it as a call to reaffirm their relevance by engaging more directly with the evolving world of work.

This involves recognising that credentials alone are no longer the sole markers of readiness or potential; demonstrable skills now carry growing weight. Higher education institutions must embrace the idea that their mission extends beyond awarding degrees to cultivating competencies that matter in real-world contexts.

In doing so, universities can position themselves as key players in a broader learning ecosystem, bridging knowledge and practice, theory and application, and academic inquiry and social utility. Understanding SBH in this light allows higher education to move from defensiveness to leadership in shaping the future of work and learning.

Key issues and challenges

The global shift toward SBH has opened up new pathways for employment but also introduced significant challenges, tensions and disruptions to the structure and purpose of higher education.

Although universities are not the direct cause of this trend, their longstanding emphasis on degrees, limited responsiveness to evolving labour markets and traditional academic structures have left them increasingly susceptible to being bypassed.

The most pressing issues facing institutions include:

• Declining authority of the degree: Once the gold standard, degrees are increasingly seen as incomplete or unreliable job readiness indicators. The rise of targeted certifications, bootcamps and skills badges has led to questions about whether traditional credentials remain the best route to meaningful work. This weakens universities’ traditional gatekeeping function and raises existential questions about the meaning of their credentials.

• Curricular realignment and the employability imperative: Growing pressure exists to revamp curricula to meet employer needs, often emphasising marketable, technical or ‘job-ready’ skills. While this has driven innovations such as competency-based education and experiential learning, there is concern foundational disciplines may be marginalised. Institutions must balance relevance and depth.

• Fragmentation of knowledge and credential inflation: SBH has contributed to modularised, atomised learning into specific credentials. Micro-credentials, badges and AI-assessed simulations offer portability but risk credential inflation, requiring excessive documentation to prove competence.

Without coherent frameworks, this can overwhelm learners and employers and erode trust in credentials, especially when disconnected from broader educational narratives.

• Balancing speed and depth: The labour market increasingly demands workers who can be rapidly upskilled and deployed, favouring short, stackable and just-in-time learning models. In contrast, universities have traditionally emphasised deep, reflective and developmental learning.

While accelerated programmes may enhance accessibility and responsiveness, they risk compromising the critical thinking, synthesis and intellectual rigour that define higher education. The challenge for universities is to create learning trajectories that are both agile and meaningful, combining immediacy with depth and adaptability with substance.

• Inequality among institutions: SBH affects elite and non-elite institutions differently. Well-funded universities may integrate skills pathways while maintaining comprehensive education, but less-resourced ones may face transactional, short-cycle, high-volume models. This risks exacerbating inequities in education and social mobility.

• Redefining academic work and faculty roles: Faculty face pressure to align courses with external standards, produce measurable outcomes and integrate industry tools. This reduces intellectual autonomy and imposes managerial accountability. Academics navigate market demands, internal metrics and public scrutiny, with little space to debate learning’s broader purposes.

• Blurred boundaries between education and training: SBH blurs lines between education, training and credentialing. While applied learning has value, the instrumental turn risks flattening higher education’s purposes, turning universities into corporate HR extensions serving short-term labour needs rather than fostering long-term social and intellectual development.

The dynamic nature of the jobs market and the emphasis on skills mean that continuous learning is paramount. Higher education institutions are well-positioned to become hubs for lifelong learning.

• The urgent need for governance, standards and alignment: New credentials proliferate faster than standardisation systems. Many lack integration into national qualification frameworks, leaving students uncertain about their learning’s value or progression. Universities must help develop and align coherent credential recognition systems with governments, industries and platforms while protecting academic rigour and values.

Ideological foundations of skills-based hiring

The rise of SBH is not merely an employment trend but part of neoliberal restructuring in higher education. Neoliberalism redefines value, knowledge and success, casting individuals as self-managing entrepreneurs responsible for lifelong employability, while institutions prioritise performance, efficiency and output.

Education shifts from a collective investment in democratic life and human flourishing to a transactional pursuit of market-aligned skills, measured in credentials, employability and salaries. This replaces education as formation (thought, citizenship and ethics) with education as function (economic utility and speed).

This ideology drives the new institutions and technologies that are displacing universities’ epistemic authority. Digital platforms, employers and algorithms define which skills matter, how to assess them, and who is employable, bypassing traditional academic gatekeepers.

Knowledge becomes modular, portable and monetisable, unbundled from historical, ethical and civic contexts. The university, once a space of inquiry and dissent, is pressured to become a labour market service node producing adaptable human capital. This shift is ontological and political, signalling profound changes in knowledge and power architecture.

Future outlook and recommendations

Higher education faces profound institutional, intellectual and cultural reshaping due to SBH. Universities are increasingly expected to demonstrate their economic value by aligning academic programmes with labour market needs, justifying tuition through measurable graduate outcomes, and responding to employer expectations for job-ready skills. This leads to shrinking of less marketable disciplines and growth in STEM, business and applied fields.

Faculty roles evolve toward productivity metrics, digital delivery and external partnerships. Alternative education providers are increasingly disrupting the traditional monopoly of degree-granting institutions, particularly by offering flexible, skills-focused pathways that resonate with mid-career professionals and first-generation learners.

Non-elite and underfunded institutions face an existential squeeze, asked to behave like businesses without comparable resources or prestige. Failure to redefine purpose risks being hollowed out or left behind.

The market can develop alternative workforce readiness pathways but cannot sustain progress without universities, particularly for fundamental research, critical thinking and long-term human development. Many digital economy innovations originated in university labs, often publicly funded.

While markets produce knowledge, universities generate foundational insights through slow, uncertain inquiry. Universities train not only workers but also teachers, managers, scientists, leaders and citizens.

Markets produce short-term skill sets but rely on universities for imagination and ethical reflection. A thriving market needs a robust, pluralistic university system as an upstream partner.

In view of the challenges posed by the rise of SBH, the following recommendations are offered to higher education institutions in the short and long term.

Short term: Adapt with integrity and strategic collaboration

Higher education must pragmatically align with market needs while safeguarding its core mission. Strengthening university–industry collaborations and public–private partnerships can facilitate the co-development of programmes, certifications and research agendas that address workforce demands.

These partnerships foster applied learning pathways, boost graduate employability and ensure curricula remain responsive without being dominated by market forces.

Competency-based education, internships, micro-credentials and hybrid programmes help make students’ capabilities more visible and transferable.

Importantly, this adaptation must preserve academic integrity by balancing technical skills with critical thinking, ethical reasoning and civic responsibility. By collaborating without capitulating, universities can rebuild credibility, enhance relevance, and prepare students not just for jobs but for complex, meaningful lives.

Long term: Reclaim purpose and reimagine structure

Universities must reclaim their role as public, democratic and epistemic institutions dedicated to cultivating inquiry, citizenship and human potential. This requires restructuring toward interdisciplinary, lifelong and socially responsive models of education.

Universities should take a leadership role in defining what knowledge is valuable amid complexity and rapid change, investing in fundamental research, critical thinking and ethics.

Democratising access by reducing barriers of cost and elitism and fostering inclusive innovation are essential priorities. The aim is not to compete with market demands but to establish an educational paradigm that integrates human development, collective insight and social justice as central pillars of sustainable economies and societies.

The need for common recognition frameworks

The proliferation of credentials in skills-based hiring signals a fundamental redefinition of how societies recognise, validate and communicate human capability. In response to the rise of SBH, a growing ecosystem of verified assessments has emerged to make skills more visible, verifiable and portable.

This shift moves away from traditional, time-bound education toward modular, evidence-based learning that can be acquired and updated throughout one’s career. These new credentials are often more agile, industry-aligned and accessible than degrees, offering quicker routes to employment.

However, their rapid growth raises concerns about standardisation, credibility and fragmentation. Without common recognition frameworks, the sheer volume of credentials risks generating noise rather than clarity – especially as private actors set their own standards.

The challenge for higher education and policy is to engage this trend without losing epistemic authority, ensuring that skills recognition remains rigorous, transparent and educationally grounded – not driven solely by market logic.

In sum, SBH has created a parallel credential economy that challenges higher education’s relevance, structure and identity. While this shift offers new opportunities for flexibility and access, it also calls on universities to reassert their value not by resisting change, but by shaping it.

This means creating models of learning where foundational knowledge, applied skills and civic purpose are integrated – intentionally and ethically. The university of the future must be adaptable but principled, market-aware but not market-defined, and committed to both employability and emancipation.

Min Bahadur Bista is a former professor of education at Tribhuvan University, Nepal, and a former education specialist with UNESCO, having served in multiple countries across the Asia-Pacific region and beyond. He currently works as an independent education consultant, specialising in education policy, governance and reform in developing and transitional contexts.

This article is a commentary. Commentary articles are the opinion of the author and do not necessarily reflect the views of University World News.