How Skills-Based Hiring in Australia Is Changing the Job Market

October 27, 2025adminCareers

When being assessed by potential employers, it’s increasingly your skills — not just your experience that comes into play . Research indicates that 86% of employers now use skills-based hiring — a major shift in how they evaluate candidates.

As organisations across Australia grapple with widespread skills shortages, many are rethinking the way they recruit. Rather than focusing solely on qualifications or years in a role, employers are looking more closely at what people can actually do — the practical abilities, soft skills and technical expertise that drive performance.

So, what exactly is skills-based hiring, and why is it becoming such a defining trend in today’s job market?

What is skills-based hiring?

Skills-based hiring occurs when candidates’ skills are prioritised over other factors, including education and years of experience. When undertaking skills-based hiring, employers focus on people who can do the specific type of work that is required for the role. This approach gives organisations greater flexibility and allows them to consider a more diverse pool of applicants.

Why is it on the rise?

To combat widespread skills shortages, many employers are now adopting skills-based hiring. Factors such as declining birth rates, shifting employment trends and an ageing population are driving these skill shortages. Up to 85% of hiring managers say skills gaps are hurting team performance. Therefore, they are turning to skills-based hiring in an attempt to fill gaps in critical skills. Some of the skills that employers are most having difficulty filling include:

• Hard/technical skills
• Critical thinking and problem-solving skills
• Leadership and management skills
• Communication skills

Persistent skills shortages come despite a strong pool of university graduates. Many experts warn that universities fail to produce graduates with the hands-on, job-ready capabilities today’s workplaces demand. As a result, employers are increasingly valuing practical experience, micro-credentials and evidence of continuous learning — areas where motivated professionals can really stand out. This shift also benefits candidates from non-traditional backgrounds, who may have strong skills but lack formal qualifications.

What skills are most important to employers?

Employers and employees often disagree on which skills matter most. Research indicates the most important skills to employers are:

• Communication and teamwork 84% of employers said this was a critical skill
• Critical thinking and problem solving: 81% of employers stressed the importance of this skill
• Adaptability and flexibility at work: 71% of employers rated this skill highly

By contrast, employees believe that leadership and technical skills are the most important. Understanding this difference can help job seekers tailor their resumes more effectively and highlight the capabilities employers value most.

What does this mean for employees?

Experts say that in the era of skills-based hiring, employees must focus on continually evolving their ills. You should take charge of your own upskilling, not just rely on company professional development programs. Employers value people who show initiative and a commitment to lifelong learning through short courses or volunteering.

When applying for a new role, make sure to highlight your skills, not just your qualifications. By understanding which skills are most valued — and how to demonstrate them — you can give yourself a significant advantage in today’s job market. Whether you’re looking to move up in your current field or pivot into a new industry, presenting your skills clearly and confidently can make all the difference.

Are you looking for a new career? Melbourne Resume Writers can help. We are pleased to offer a range of professional services, including our expert resume writing and selection criteria writing service, to help you stand out in an increasingly skills-focused job market. Our experienced writers know how to showcase your strengths and align your skills with the roles you want, giving you the best chance of success.