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A potential solution for labour shortage in Europe is the adoption of a skills-first hiring concept

Europe is still enduring labour shortages three years after the onset of the pandemic. There are fewer and fewer highly skilled people to fill open positions in the European labour market and high inflation, the Ukrainian war and the global energy shortage are making the situation even worse. Shortages in healthcare, information and communications technology, hotel and catering sector can be seen everywhere on the continent.

Demographic transition is added up to digital and ecological structural changes, which can only be managed with a sufficiently skilled workforce. Countries with a high shortage of skilled workers rely heavily on the immigration of skilled workers. However, since there is also a shortage of skilled workers in other European countries, the required personnel must even be recruited from third countries outside the EU.

A wide range of EU initiatives affect and target this complex phenomenon, including in relation to the green and digital transition, skills, mobility, and migration. The European Commission has declared 2023 the European Year of Skills to further emphasize the importance of initial and ongoing skills development to meet Europe’s labour market requirements.

Experts say that one of the solutions to labour shortage can be the adoption of a skills-first hiring concept. “There are large pools of talent that remain underutilized or even wasted,” European Commissioner Nicolas Schmit said at a European Year of Skills event in May. 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.

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’. A micro-credential is a short, competency-based recognition that allows an educator to demonstrate mastery in a particular area. As a response from the EU Council, it plans to standardize credentials across Member States and between public and private training providers and create a common skills taxonomy in order to standardize the requirements.

It will take years to show if skills-first hiring can help close the skills gap, however, it might bring a more efficient hiring system and help increase the talent pool, which is beneficial for employers and people who want to be hired as well.