In response to the soaring demand for AI and green roles, the UK labour market is increasingly favouring skill-based hiring over traditional degrees. Matthew Bone, Eugenia González Ehlinger and Fabian Stephany write that the movement reflects a shift towards practical competencies and alternative pathways into high-growth industries.

The UK labour market is undergoing major changes, with two sectors in particular—artificial intelligence (AI) and the green economy—expanding at breakneck speed. In January, the government launched the AI Opportunities Action Plan, aiming to create over 13,000 new tech roles. However, numerous British firms still report insufficient domestic candidates, leading nearly half to anticipate hiring AI specialists from abroad by 2025. On the green side, UK growth has averaged 20 per cent annually for five years, surging by 46 per cent between 2024 and 2025. Employers across the board struggle to find the specialised talent they need.

Our latest research paper examines how businesses in the UK are responding to these gaps. We analysed over 10 million job postings from 2018 to mid-2024, capturing the rapid evolution of AI (including major new model releases and the rise of sustainability roles). Below are three key findings:

Trend 1. Skills grow in relevance

Specific skill sets now outweigh traditional qualifications in many AI and green jobs.

For AI positions, job adverts are more focused on specific skills, mentioning skills three times more frequently than general openings. For green jobs, that figure is twice as high as the labour market average.

Skills such as machine learning frameworks or eco-friendly waste management approaches often come with a wage premium. For AI roles, key technical proficiencies confer a 23 per cent salary boost, comparable to the pay rise historically tied to a PhD. This emphasis on demonstrable abilities allows employers to target individuals trained via alternative routes—bootcamps, online courses, or on-the-job experience—rather than relying solely on candidates with formal degrees.

In figure 1 below, we see a dramatic growth for many AI and green related skills over the last years (left), alongside evidence that these roles require twice (green) or three times (AI) as many specific skills and command substantially higher wages than the broader labour market (right).

Figure 1. Growth in demand for AI and green-related skills

Trend 2. High formal degrees are less relevant

Our second major insight is the reduced importance of advanced formal education for these high-demand segments.

• Between 2018 and 2024, AI job postings requiring degree-level qualifications fell by 15 per cent.
• In green occupations, MSc or PhD credentials appear less frequently than more practical qualifications like higher national certificate (HNC) or higher national diploma (HND). See figure 2, left-hand side.
• The wage premium for degrees has eroded. Green roles listing Master’s or Doctorates offer no higher salary than those seeking only vocational certificates, while in AI the degree-based premium has virtually disappeared. See figure 2, right-hand side.

This trend reflects employers’ urgent need for real-world skills in swiftly evolving fields. AI’s rapid development, for example, often outpaces academic course content. Similarly, green jobs covering energy efficiency or restoration demand hands-on abilities and a large set of manual skills that universities do not always teach.

The share of AI roles requiring advanced degrees has declined as green positions increasingly favour lower-level qualifications (left), while the wage premium for higher degrees in both AI and green roles has flattened (right).

Figure 2. Required skills and salary paid

Trend 3.  In-demand occupations

These shifts are most evident where AI and green expertise is in greatest shortage. Public service roles that require green skills offer a 50 per cent higher premium for relevant competencies than for formal degrees. In science and technology positions demanding AI capabilities, skill-based qualifications can lead to salaries three times higher than those linked to traditional education.

Such occupational categories are adapting the fastest. Tight labour markets may drive companies to prioritise day-one readiness and in-demand proficiencies, rather than waiting for a narrow group of university graduates with advanced credentials.

Reconciling skills and education

Formal degrees still have value, providing foundational knowledge and proven analytical abilities. Nonetheless, our research indicates that businesses may be lowering strict degree requirements because there simply are not enough qualified applicants to meet the demand. Instead, they may rely on other  indicators—like project portfolios, coding tests, or micro-credentials—to gauge competence.

This transformation could open doors for a broader range of jobseekers. Bootcamps, online courses, or intensive apprenticeships might produce candidates who match employers’ needs more effectively than conventional degree pathways. Similarly, companies can re-skill or up-skill their existing workforce, bridging gaps internally without waiting for universities to catch up.

Education and training providers should embrace flexible, industry-aligned programmes, while policymakers can facilitate clear credential frameworks, such as micro-credentials, that validate non-traditional learning. Ultimately, these developments indicate a new balance between formal education and targeted expertise. By valuing proven abilities as much as academic background, employers gain access to a far wider talent pool—one better suited to handle the rapid evolution defining the future of work.

Sign up for our weekly newsletter here.

• This blog post represents the views of its author(s), not the position of LSE Business Review or the London School of Economics and Political Science.
• Featured image provided by Shutterstock.
• When you leave a comment, you’re agreeing to our Comment Policy.

Print Friendly