Davos Agenda

Adopting a 'skills-first' approach could help more than 100 million people worldwide get better jobs

Switching to a skills-first mindset has the potential to directly benefit upwards of 100 million people around the world who are currently under-utilizing their existing skills

Switching to a skills-first mindset has the potential to directly benefit upwards of 100 million people around the world who are currently under-utilizing their existing skills Image: rawpixel.com/kwanloy.

Bob Moritz
Global Chair, PwC
Saadia Zahidi
Managing Director, World Economic Forum
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  • A skills-first approach focuses on a person’s skills and competencies, rather than on their qualifications or job history.
  • This approach can help build a more inclusive and diverse workforce and boost productivity, economic growth and resilience.
  • The World Economic Forum, in partnership with PwC, has created a framework to help CEOs and governments achieve this.

Ask any business leader what big challenges they face and it's likely that skills and labor shortages will be high on their list. They are particularly concerned about how to develop the skills they need for the so-called “jobs of tomorrow”, such as those needed for the digital, green and energy transitions.

PwC's 26th Annual Global CEO Survey found that more than half of the 4,410 chief executives surveyed believe that labour and skills shortages will significantly impact profitability in their industry over the next 10 years. The World Economic Forum’s latest Future of Jobs Report 2023 finds that organizations across all industries identify skills gaps and an inability to attract talent as the key barriers preventing industry transformation.

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At the same time, large numbers of people across the globe are being excluded from the labour market because they lack the right qualifications to land well-paid quality jobs. That has potentially huge negative consequences, not just for their personal well-being, sense of worth and financial prospects, but for their families and local communities too.

There is a potential solution to all of this: a “skills-first” approach. It has the power to transform the way that labour markets operate.

New report focuses on a skills-first mindset

Our new report, Putting Skills First: A Framework for Action, launched during the World Economic Forum's Growth Summit, finds that switching to a skills-first mindset has the potential to directly benefit upwards of 100 million people around the world who are currently under-utilizing their existing skills, either because they are under-employed in their current job or because they are unemployed. The analysis, which covers 18 economies, finds that workforce under-utilization ranges from 4% of the working population in Thailand, to 7% in the US, 13% in France, 27% in Brazil and 43% in South Africa.

A skills-first approach turns the traditional recruitment and retention model on its head by focusing on a person’s skills and competencies rather than on their qualifications or job history, so that what someone can do becomes far more important than which university they went to.

Crucially, this focus on skills continues long after the worker has been hired, with an emphasis on continually developing their abilities right through their career.

What are the benefits of a skills-first approach?

The benefits of making skills a priority are potentially game-changing for all stakeholders in the equation. For businesses, taking a skills-first approach dramatically increases the potential pool of talent from which they can draw on. More than that, it could help provide them with the specific talent they need to deliver on today's priority business outcomes, whether that be fueling innovation, enhancing customer experience, managing costs, or entering new markets.

Many businesses are challenged with reinventing their business models in response to a range of external and internal drivers ranging from economic and geopolitical uncertainty to stakeholder and competitive pressures. Accessing new pools of talent can play a critical role in meeting today's and tomorrow's goals, whether that be growth in revenues, profitability, productivity, innovation or sustainability goals.

For individuals, a skills-first approach provides access to good jobs that offer skills building, career progression and higher earning potential which they would otherwise have been excluded from without the right qualifications. Having access to continual upskilling also ensures that their skills stay relevant in a continually changing job market. There is continued evidence of skills inequity based on qualifications - in PwC's Hopes and Fears Survey of 32,500 global workers in 2021, 46% of people with postgraduate degrees said their employer gives them opportunities to improve their digital skills, but just 28% of people with school-leaver qualifications said the same.

One of the most exciting aspects of taking a skills-first approach is that so many of the skills that businesses are looking for, and that individuals can offer, are transferable between different roles and industries. If a business is looking to hire someone in information security, for example, they may find someone with adjacent skills in cyber-security or data analysis who, with a bit of training, will meet their needs perfectly.

For society, taking a skills-first approach can create a far more inclusive and diverse workforce, because it means that people who missed out on traditional education pathways have more opportunities in the labour market. For the economy, fewer shortages of skills and labour will mean higher productivity, more innovation and higher GDP growth - plus a better sense of preparedness for the future.

How can leaders enable a skills-first approach?

Delivering such ground-breaking change requires more than simply the involvement of HR teams. It will require the commitment of CEOs and policy-makers at the highest level to drive it through.

Some progress is already underway. PwC UK, for example, has introduced a range of degree apprenticeship programmes which enable applicants without a degree to gain one while working at the firm. The organization is also developing new career paths within its network to ensure it has the right skills to meet the changing needs of the economy, such as the creation of a new technologist career path.

Embedding a skills-first approach will take decisive multistakeholder collaboration to succeed, which is why the Forum and PwC have joined forces to create a coherent framework for CEOs and governments.

A skills-first approach is an exciting, innovative and results-focused answer to a significant problem. It turns a challenge into an opportunity which will not only ease the transition to a digital, net-zero world, but create a more inclusive, more equitable and more prosperous society.

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