Employers in rapidly evolving sectors like artificial intelligence (AI) and sustainability are changing how they hire. Traditional education credentials are being replaced—or at least supplemented—by skills-focused hiring practices. This shift is driven by a growing gap between the supply of qualified workers and the demand for emerging technical capabilities. Based on an analysis of around one million online job vacancies in the UK, this study finds that employers are prioritizing skill sets over academic qualifications, particularly in AI-related roles.
Context
As industries adapt to digitalization and environmental sustainability—a dual movement known as the "twin transition"—new job roles are emerging. Many of these roles require skills that formal education systems have not yet fully integrated. This misalignment creates talent shortages and prompts companies to look beyond traditional hiring methods. By focusing on individual skills, employers can broaden their talent pool and access workers who have developed competencies through non-traditional paths such as online courses, vocational training, or self-directed learning.
Main Findings
- Declining Emphasis on Degrees in AI
AI-related job ads have reduced their focus on formal education. While a high share of AI roles still mention university degrees, the frequency is decreasing. For example, the requirement for a PhD in AI roles has dropped sharply. This indicates that employers are becoming more open to candidates who bring relevant skills without advanced degrees. - AI and Green Jobs Demand More Skills
Compared to the average job posting, AI and green jobs list a significantly higher number of required skills. AI roles, in particular, are three times more skill-intensive than the average posting, frequently asking for competencies in machine learning, neural networks, and natural language processing. - Wage Premium for AI Skills
Jobs requiring AI skills offer substantially higher salaries, often surpassing the wages associated with jobs requiring university degrees. On average, possessing AI skills can lead to a 16% wage premium—comparable to holding a PhD. This trend highlights the value employers place on applied expertise in AI. - Green Skills: Important but Less Rewarded
Green jobs also require diverse and technical skills, especially in environmental regulation, clean energy, and waste management. However, the wage premium associated with green skills is less pronounced compared to AI roles. In many cases, green jobs continue to emphasize educational attainment as a key requirement. - The Disappearance of the Education Premium in AI
A regression analysis shows that for AI roles, salaries no longer rise with higher education levels. In fact, some postings that don’t require any university degree offer higher wages than those that do. This is not the case for green jobs, where a traditional educational gradient in wages still exists.
Implications for Policy and Employers
- Expand Skill-Building Channels
To address talent shortages, policymakers and companies should support diverse learning opportunities. These include apprenticeships, MOOCs, vocational education, micro-credentials, and on-the-job training. - Leverage Labor Market Data
Governments and institutions should use real-time job vacancy data to anticipate trends in skills demand and adapt training programs accordingly. - Promote Inclusive Hiring
Reducing rigid degree requirements can open the door for more candidates, increasing diversity and inclusion in the workforce. Skills-based hiring can also improve social mobility by giving credit to practical experience and self-directed learning. - Adjust Education Systems
Higher education should align more closely with industry needs, especially in rapidly evolving fields. Universities and training providers must update curricula to include emerging technical skills.
Conclusion
Skill-based hiring is gaining traction in response to the demands of the twin transition. The shift is especially visible in AI, where employers are valuing practical expertise more than academic pedigree. While green roles are following this trend more slowly, similar pressures may drive further change. A strategic response involving education, employers, and policymakers is needed to equip the workforce with the right skills for the future.
