Finding a new job is hard; so is finding the right employee to fill a vacancy. This can limit how much firms and employees are able to grow, both commercially and professionally.

There are many causes, ranging from the fact that the job-finding process can be highly individualised to the information gap between jobseekers and employers. As a result, mismatches are often present in labour markets, which in turn affects the wider economy.

For the employer, a mismatch can result in lower productivity or a vacancy left unfilled; and for an employee, a mismatch can lead to unsatisfying work or compensation that does not accurately reflect their skills.

The recent growth of AI tools in recruitment is addressing these challenges by helping labour markets to function more effectively and transparently. In this report, we look at the impact on labour markets of using AI tools in recruitment, with a focus on a selection of applications used in the candidate sourcing part of the recruitment process. AI-powered search and recommendation tools help to drive the labour market’s move towards more skills-based hiring, by alleviating some of the existing asymmetry of information. According to the OECD, 25% of workers are over- or under-skilled for their current position. By accessing more information about the skills profile and work experience of potential candidates, recruiters can increase the size of their talent pool to improve the quality of matches. AI tools also facilitate the cross-border recognition of skills, providing jobseekers with access to a wider range of employment opportunities.

View the infographic here.