There are few safe bets about the future, so the impact of technology on labour markets, how transitions through education and into work will change, and the need to reskills and upskill, can only be predicted.
But we do know that technology – AI in particular – is a disruptive force. We know that declining birth rates and higher employer skills needs have the potential to create a difficult labour market that hinders growth. We also know it’s likely that people who don’t adapt to changes in work could see their careers suffer.
In response to these shifts, graduate and apprentice employers are considering fresh approaches to their talent strategies. Strategies that will focus less on a person’s age, education and technical experience, and more on their skills, capabilities and aptitudes.
The Institute of Student Employers (ISE) recent report, From early career to emerging talent, shows that 68 per cent of early career employers have already adopted or partially adopted a skills-based strategy to hiring – and another 29 per cent are considering it.
A constricted labour market
Quite rightly, we are all concerned about the tough jobs market facing students, the high volumes of applications they make, and the time it takes many to get a graduate job. Because of the UK’s anaemic growth, the current labour market is tight (ISE predicts graduate vacancies will only grow by one per cent this year). But once growth returns to the economy, it’s likely employers will see significant talent shortages.
We can see latent labour market problems in the current Labour Market Information (LMI) data. The UK’s unemployment rate at 4.4 per cent is historically low. Only 16.4m people in England and Wales are educated to level 4 or over – yet there are 18.6m jobs currently at that level, rising to 22.7m over the next 10 years. Over the next decade the working age population will increase only by 1.14m people (the over-70s, on the other hand, will increase by 2.1m).
Mention 2022 and while most remember the heatwave, recruiters remember the post-pandemic growth spurt which left many vacancies unfilled. A CIPD labour market survey from summer of that year reported that 47 per cent of employers had hard-to-fill vacancies and the top response to difficulties reported by employers was to upskill existing staff.
A problematic word
What is a skill, an attribute or a capability? What can be taught, learned and developed, and what individual traits are innate? Some skills are technical, some more behavioural. And we’ll all have our own views on the abilities of ourselves and others. So, the word skills is problematic, which makes agreement on what approach we take to skills problematic.
In their recent Wonkhe articles, Chris Millward and Konstantinos Kollydas and James Coe are right to highlight the challenge of differentiating between knowledge, technical behavioural and cognitive skills. To varying degrees, employers need both. I’d add another challenge, particularly in the UK: the link between what you study and what you do is less pronounced. Over 80 per cent of graduate recruiters do not stipulate a degree discipline. This makes connecting skills development to the labour market problematic.
Another problem with the use of the word skills is the danger that we take a reductive, overly simplistic view of skills. A student who does a group activity successfully may think they’ve nailed teamworking skills. In reality, working with people involves a multitude of skills that many of us spend our working lives trying to master.
Employers are already increasing their focus on skills
In their report The skill-based organisation: a new operating model for work and the workforce, Deloitte describe how organisations are developing “a whole new operating model for work and the workforce that places skills, more than jobs, at the centre.”
As recruitment for specific expertise becomes more challenging, people are matched to roles based on skills and potential, less on experience in a role. Skills-based hiring strategies encompass career changers, older workers, people who have near-to work experience. Technology maps an organisation’s skills base to create an internal marketplace for roles and employees are encouraged to re-skill and upskill in order to move about the organisation as jobs change.
Graduates will need the skills and associated mindset to navigate this future world of work. World Economic Forum 2025 Future of Jobs analysis shows that 69 per cent of UK organisations placed resilience, flexibility and agility in the top five skills that will increase in importance by 2030.
Graduate recruitment strategies could evolve to make less use of education exit points to define the talent pool hired from: career-changers, older-workers, and internal switchers are incorporated into development programmes. More learning content becomes focused on developing behavioural and cognitive skills to promote a more agile cohort.
Students do develop skills
Within HE, practitioners have already established a considerable body of knowledge, research and practice on employability skills. Where change is occurring, is in the campus-wide approach to skills that many institutions have developed (or are in the process of developing). Approaches that aim to ensure all students have the opportunity to develop a core set of skills that will enable them to transition through education and into work. Bristol and Kingston, among others, have shown how skills can be embedded right across the curriculum.
I’m a big fan of Bobby Duffy’s work on delayed adulthood which suggests to me that the average student or graduate in their late teens and early twenties is at quite a different stage of development to previous generations. Which means that it’s wrong-headed to think of deficits in students’ work readiness as the fault of students (or their coddling parents).
Employers and educators together have a role to play in helping students understand their own skills and how to develop them. Skills require scaffolding. Surfacing skills in the curriculum ensures students understand how their academic work develops core skills.
And the provision and promotion of extra-curricular activities, including work experience, can be built into the student journey. Programmes where students develop their ability to deal with change and challenging situations, to analyse and solve complex problems, to adopt a positive approach to life-long learning.
The skills agenda opportunity
At the ISE we leave the language of skills gaps and employers’ apparent low opinion of graduates to the tabloids. Only 17 per cent of employers in our annual survey say they disagree that graduates are not work-ready. We do ask a more subtle question on the attitudes and behaviours that employers expect early career hires to possess when they start work. The top skills employers thought students weren’t as proficient in as they expected were self-awareness, resilience and personal career management.
I am not, never have been, and never will be, a policy wonk. Maybe someone who is can design the architecture of incentives and systems that better connect education pathways to labour market needs. This architecture will also have to be able to predict labour market needs four to five years in advance, because that’s the lag between a typical students’ course choice and their job application. But if that can’t be done, surely a good investment is ensuring that students have plenty of opportunities to develop their skills and attributes to deal with an ever more changing workplace.
Fully embracing a skills approach is a great opportunity to demonstrate how HE adds value to the UK economy through the triangulation of student interests, employer needs and a great education experience.
Read the ISE’s report, From early talent to emerging talent, for a detailed analysis of the forces impacting how employers will hire and develop students in the future.
