To what extent does skills-based hiring hold onto the promise of creating more equal opportunities for all in the labour market? And, if indeed so, does this mean that the degree is no longer important?

Alongside fast-changing skills requirements and employers’ purported difficulties in finding the right type of labour supply to fill their vacancies, skills-based hiring has gained traction in recent academic and policy discourses as a means to fill the skills shortages. The idea is that rather than using broad-level educational qualifications such as the degree as a proxy for the candidate’s expected potential and performance, employers break down the job into its constituent skills components – supposedly the actual demands required to perform the job – and use it to look for the candidate that makes the best match. Proponents argue that this approach will create a more efficient and inclusive labour market. By being specific about the skill requirements of the job, they argue that skills-based hiring will allow employers to send clearer signals to reach out to more suitable candidates. At the same time, because skills-based hiring shifts away from the educational credentials as an (arguably) artificial restriction from accessing certain job opportunities, it will create more equal labour market chances especially for those without a degree.

To what extent does skills-based hiring hold onto the promise of creating more equal opportunities for all in the labour market? And, if indeed so, does this mean that the degree is no longer important? In this article, we shall discuss this issue in relation to some recent trends that we have observed from online job postings data of Singapore’s labour market.

What the data tells us: employers’ requirement for both the degree qualification and skills have risen in Singapore

Job postings data are able to provide in-depth information about the dynamics of employers’ hiring patterns in the external labour market. We analyse a near universe of online job postings data collected by the labour market analytics firm Emsi Burning Glass, to study the trends in their demand for the degree qualification and skills in Singapore’s labour market between 2012 and 2019. These are the key findings:

1. Employers’ requirement for both the degree qualification and skills have risen in Singapore. The share of job postings requiring at least a degree has increased from 37.2% in 2012 to 55.9% in 2019 (increase of 18.7 percentage points), while the average number of skills that employers specify in the job postings has increased from 6.4 skills per posting in 2012 to 8.6 skills per posting in 2019 (increase of an average of 2.2 skills per job posting).

2. At the occupational level, there is a strong positive association between employers’ demand for the degree qualification and skills specification (Figure 1).

• In particular, employers hiring for ICT-related occupations (points 133, 251, and 252 in Figure 1) – which are among some of the fastest-changing occupations in the labour market – have some of the highest specification for both degree and skills.

• There are however notable exceptions to this general trend. There is a small number of occupations with uncharacteristically low skills specification vis-à-vis their requirements for the degree qualification (bottom right quadrant of Figure 1). These are highly-regulated occupations, comprising of healthcare, legal, and teaching professionals with strong certification pathways that give access to the occupations.

Figure 1. The relationship between employers’ demand for degree requirements and skills specification at the occupational level in Singapore, 2019

Note: Each point in the plot represents an SSOC 3-digit occupation. The blue line indicates the best-fit line for all occupations represented in the plot (ρ = 0.68). The red line indicates the best-fit line after excluding the occupations which are outliers (ρ = 0.84).

‘Plug-and-play’ model for skills: shift from trainability to job-readiness

 Mostly, the patterns from the data suggest that employers are turning towards a ‘plug-and-play’ model for ready-made skills. Given the rapidly changing job environment, the time available to prepare the workforce for new, emerging skills is becoming shorter. Rather than waiting for these skills to be trained, employers want the new hire to already be equipped with the right skills and experience that allow them to be plugged into work immediately. In some ways, this will shift the bulk of the burden of job training from the employer to the individual, from on-the-job to before-the-job. This becomes a tricky problem – because, how would potential employees get the chance to build these job specific skills, if not on-the-job? There will also likely be greater onus on the candidate to have to demonstrate this state of job-readiness to employers during the hiring process. In fact, these patterns become more interesting when we contrast employers’ requirements when hiring for ICT-related occupations, with those when hiring for the regulated “closed” occupations where the education or certification process provides strong occupation-specific credentialism. 

The job competition model and the role of the degree

 However, despite their search for more job-ready skills, it does not appear that employers in Singapore are dropping the degree requirement when looking for candidates to fill their vacancies. On the other hand, the patterns suggest that the degree qualification may be evolving into a basic requirement that employers use to filter out candidates who do not make the mark.

Fundamentally (herein lies what we think is the crux of this debate), the objective of employers is to fill their job vacancy with the most ‘suitable’ candidate – whether this means the candidate with the best future potential (trainability) or with the most job-ready attributes to plug current needs. In a competitive selection process, this means that the candidate must somehow demonstrate that they are more employable than other job seekers. Thurow (1975) describes this as a labour queue (although we note that he originally discussed it in the context of identifying the candidate with the most trainable potential rather than job-ready attributes), where candidates are allocated a relative position in the queue and compete for the best jobs in the job market based on their background characteristics. How this works out would likely depend on the dynamics of labour supply and more importantly availability of good jobs in the labour market. With an increasing pool of graduates in the labour market, the competition is likely to intensify. While it is tempting to suggest that skills-based hiring will provide for a more equitable alternative hiring model, it may well be that having the degree qualification (notwithstanding having job-ready skills) will evolve into a defensive necessity needed to be eligible for a position in the queue and gain access to more opportunities.

Reference:

 Thurow, L. C. (1975). Generating Inequality: Mechanisms of Distribution in the U.S. Economy. Basic Books, New York.