What does a skills-based approach mean in the labour market, and is it understood in the same way across different countries?

A skills-based, or as more commonly called skills-first, approach places demonstrated skills at the centre of hiring, career progression, training and workforce development, while treating qualifications and work experience as complementary signals rather than primary gatekeepers. The OECD defines it as prioritising what people can do, regardless of where or how they acquired their skills.

However, the concept is not interpreted identically everywhere. Some countries and organisations focus mainly on skills-based hiring, such as removing unnecessary degree requirements. Others adopt a broader systemic approach that includes skills taxonomies, modular learning, micro-credentials, recognition of prior learning, career guidance and skills passports. A truly skills-first system requires both skills development and skills recognition, supported by a common skills language and enabling institutions. Our report A Skills-First Labour Market discusses what skills-first approaches are and presents examples of how countries are implementing them.

Which countries have the most interesting examples of implementing a skills-based approach? How would you position Estonia?

Based on our analysis in A Skills-First Labour Market, Australia, Sweden, France and the United Kingdom are the overall frontrunners in the OECD Skills-First Readiness and Adoption Index. These countries combine strong learning systems, advanced skills recognition mechanisms and supportive institutional environments.

Some particularly interesting examples include:

• Australia: developing a comprehensive National Skills Taxonomy through extensive consultation, data analysis and AI tools to support a national skills-first transition.
• United Kingdom: developing the Standard Skills Classification and Occupational Maps, which connect skills, occupations, qualifications and career pathways.
• France: combining skills-focused occupational standards, a national skills passport and a strong recognition of prior learning system. While not widespread yet, France also operates innovative skill-based recruitment through simulation-based assessments.
• Singapore: perhaps the most comprehensive example of linking skills intelligence, a common skills language, micro-credentials and flexible learning, and skills passports into a coherent system.

Estonia is making progress towards a skills-first labour market. The continued development of the skills system, its planned integration with OSKA, and the existence of the Skills Compass provide a good foundation for this transition.

How can education systems keep pace with labour-market expectations? What is the most difficult part?

For education systems to keep pace with evolving labour market needs, several conditions must be in place. First, countries need a robust skills intelligence system with a strong focus on skills. Estonia already benefits from such a system and is working towards providing information at the skill level. Second, information on current and future skill needs must be effectively disseminated and trusted by stakeholders, a role that Kutsekoda is already successfully fulfilling. Third, education and training systems must be sufficiently responsive to changing skill demands.

Enhancing responsiveness requires education and training systems to become more modular, place more emphasis on learning outcomes and skills, and be more responsive to employers’ needs. In some cases, this may also involve a more direct role for employers in the design and delivery of education and training programmes.

One of the most significant challenges encountered, particularly in higher education, is resistance to change. Higher education institutions are often viewed as places for developing knowledgeable, critical, and engaged citizens, while their role in equipping learners with labour market-relevant skills is sometimes seen as secondary. As a result, some universities may be reluctant to adapt programmes and curricula in ways that respond more directly to employers’ needs.

What role will training, qualifications and credentials play in a skills-based approach?

Training, qualifications and credentials remain important, but their role changes. Rather than being perceived as the primary signal of competence, in a skills-based approach they should be viewed as one of the many signals of skills proficiency. Formal education, in particular, continues to remain essential for regulated professions.

At the same time, micro-credentials and short courses are becoming increasingly important tools for targeted upskilling and reskilling. Recognition of prior learning helps translate work experience and informal learning into recognised credentials, while skills assessments and skills passports make competencies more visible.

In short, credentials are not disappearing. Instead, they are becoming one element within a broader ecosystem that makes skills more visible.

Will cross-border employment become easier or more difficult?

One benefit of skills-first systems is that they make workers’ skills more visible and portable across sectors, occupations and countries. Shared skills taxonomies, skills passports and recognition systems could reduce reliance on national qualifications that are often difficult to compare internationally. Initiatives such as the EU’s Skills Portability Initiative and efforts to develop international skills taxonomies are examples of moves towards easier cross-border employment. Therefore, in principle, identifying the right employee internationally should become easier in a skills-first labour market.

The main challenge is interoperability. If countries develop different skills languages and recognition systems, mobility could remain difficult. But if skills frameworks become more aligned internationally, cross-border mobility should become easier than under today’s credential-centred systems.

Which education and labour market related topics is OECD recently or currently working on? What have been some of the key findings?

I work in the Skills and Future-Readiness Division, where we focus on adult learning, labour market shortages and mismatches, and the future of work. We are currently involved in several projects. For example, this year we are publishing reports on topics such as the returns to skills and training, the results of an OECD-wide analysis of skills shortages, Skills for Jobs, and adult learning initiatives, including micro-credentials. In parallel, we are analysing skills shortages in a number of countries and exploring the impact of AI on labour markets. We are also working on a new project on skills mismatches across countries participating in the PIAAC Survey of Adult Skills. The report is expected to be published in 2027, and it may be launched in person in Estonia next year.

The findings from these projects are quite diverse. Focusing on our work on the returns to skills and training, one key finding is that skills appear to have become more important in the labour market relative to educational qualifications between the two PIAAC cycles. We also find that training in areas such as teamwork, leadership, and project management tends to be associated with stronger labour market outcomes. These conclusions reinforce the growing importance of skills for the labour market.