A Skills-First Blueprint to Better Job Outcomes

As Chief Economist at LinkedIn, I lead a team of economists and data scientists that unearth the most interesting insights from over 800M global members. Every month I’ll share a snapshot of key trends to help shed light on where the world of work is headed. This month, we’re looking at new findings around the shift to a skills-first talent ecosystem. 

Jobs are changing, even if you're not changing jobs. And they are doing so at an increasing rate, accelerated by the pandemic. Upkeeping your skills thus has emerged as a key to staying relevant in your current role, landing a new role, and skills are front and center for all hiring managers searching for the right candidate. 

In this sense, skills are the new currency of the labor market. Recent LinkedIn data shows the skill sets for jobs have changed by around 25% since 2015. By 2027, this number is expected to double.

More than 1 billion jobs, or almost one-third of all jobs worldwide, are likely to be transformed by technology in the next decade according to OECD estimates. And LinkedIn’s own data shows that this disruption is already well underway. 

Digital transformation has impacted every sector, and the future was pulled forward by the pandemic -  with years of technological change happening in a matter of months: in 2020, members added digital skills to their profiles at a faster pace compared to the past two years combined. 

Amidst the Great Reshuffle, we’ve seen a huge recent surge in all types of skill-building activity on LinkedIn, with members adding 286 million skills to their profiles in 2021, up 22% from the year prior. 

Even in industries not considered traditionally tech-focused, we’ve seen the top skills transform to reflect this new age of hybrid workplaces, where all functions are increasingly dependent on digital tools to collaborate and perform day-to-day tasks. A couple notable examples: 

Finance Skills Disrupted by Rise of Digital Currencies: The most prevalent skills among Finance professionals have evolved with the rise of digital currencies upending the sector. Cryptocurrency and Bitcoining skills surged towards the top of the list, and notably crypto jobs are some of the fastest growing roles on our platform, as job postings with terms like “Bitcoin,” “Ethereum,” “Blockchain” and “Cryptocurrency” surged 395% YoY in the U.S. in 2021.

Digital Transformation Across Construction-Related Roles: In the U.S, Construction is the industry that saw the most skills change among LinkedIn members from 2015 to now. This industry represents a broad swath of roles on LinkedIn - from contractors, to architects, to construction managers. For architects in particular, digital skills are quickly becoming mainstream - with software tools like Bluebeam and Procure emerging as among the top skills in the field.

As jobs evolve and demand new skills, hiring managers will need to increasingly focus less on traditional proxies like degrees, and more on finding talent whose current skills match the role. We’ve started to see this take off on LinkedIn - as 40% of hirers now use skills data when hiring on LinkedIn, up 20% compared to a year prior. And in 2021 alone,  LinkedIn helped 400K+ companies make a skill-based hire. 

Companies are realizing that skills-based hiring works: hirers leveraging skills data to find the right match are 60% more likely to find a successful hire than those not relying on skills. 

And by removing unnecessary credentials, more workers can transition into better paying jobs via the relevant skills they bring to the role. Research from Opportunity @ Work shows that people Skilled Through Alternative Routes (STARs) have demonstrated skills for roles with salaries at least 50% higher than their current job. Black, Hispanic, and Veteran workers in particular are overrepresented as STARs in the U.S., and make up the majority of firstline workers. These groups stand to benefit most from a transition towards a skills-based talent ecosystem.

This is just the beginning of a much broader shift that needs to happen to create a more efficient process of matching talent to opportunity. 

As jobs are transformed by new technologies, the World Economic Forum estimates we will need to reskill more than 1 billion people by 2030. In addition to digital skills, specialized interpersonal skills will be in high demand in the new hybrid workplace. 

The good news is not all new skills are completely new. Many of the top skills in fast-growing and higher paying roles are similar in nature to skills in other fields. 

In LinkedIn’s global skills data, we’re able to help members uncover new career pathways by comparing skills across jobs and identifying pockets of “similar skills.” One clear example of a skills-enabled pivot we see happening on LinkedIn is the move from Cashier to Customer Service Representative.

The transition from a Cashier to Customer Service Representative is one occurring fairly frequently on LinkedIn, given the high volume of similar skills like Customer Satisfaction and Sales. Our skills data show these roles have a 70% skills match, meaning the barrier to entry is relatively low even for workers who might not have prior experience in this exact job function. 

The Great Reshuffle is real, and employers are struggling to keep great talent. The share of U.S. LinkedIn members changing jobs is up about 30% compared to 2021. 

This is because what professionals expect has changed. More than ever, employees consider opportunities to learn and grow as the #1 driver of great work culture. Yet, our data shows only 52% of employees feel their manager encourages the use of work time to learn new skills.

Many employers are taking note and doubling down on Learning & Development (L&D). We saw a 94% surge in demand for L&D specialists between July and September of 2021 compared to the previous three month period. And companies that excel at internal mobility are able to retain employees for an average of 5.4 years - nearly 2x as long as companies that struggle with it, where the average retention span is only 2.9 years.

Ultimately, there's no going back.

There’s no going back to a pre-pandemic economy. Remote work is, in some form or fashion, here to stay. Workers’ expectations are higher than ever. And as the bargaining power tilts in their favor, employees are more willing to walk away if they don’t see companies invest in what matters to them most, like work-life balance, flexibility, and opportunities to learn and develop as a professional. 

Amidst all this change, organizations face a choice to continue on with the same conventional ways of working, or to explore new solutions for a new world of work. The old model involved measuring the value of our careers by degrees, job titles, and the number of years we put in at work. 

The new way of thinking recognizes that skills, not proxies,  are what actually determine our ability to succeed in a job. And our data suggests the skills required to do your job don’t stay constant. They’re changing, and this change is only accelerating.

Out of necessity in this historically tight labor market, we’ve seen a huge surge in employers finally make strides towards a skills-based model to find new talent, and grow existing talent from within. We need to harness this momentum and bring this to life on a much larger scale in order to achieve a more equitable and efficient talent ecosystem.

Is your organization moving towards a skills-first model? Have the skills you rely on in your day-to-day job notably shifted over the past few years? Would love to hear from you in the comments.

Thanks to the team who helps bring this newsletter to life. Wondering how we calculate these numbers every month? Check out the full report here for detailed methodologies.