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The skills gap in the UK workforce is a pressing issue that’s making headlines and raising serious concerns for workers, employers, and policymakers alike.

The problem is so great that, according to our recent survey of 2,000 UK hiring managers 3 in 4 of them (76%) are struggling to fill roles because of the skills gap.

As the divide between workers’ skills and employers’ needs widens, it’s not only capturing extensive media attention but also seriously impacting the UK economy.

But what exactly does the term ‘skills gap’ mean, and how does it affect you? In this article, we’ll explore what’s driving this crisis and what it means for the future of the UK.

What is the UK skills gap exactly?

The UK’s ‘skills gap’ refers to the widening mismatch between the skills employers require and those available in the current workforce.

This gap spans everything from basic digital literacy and management skills to specialised expertise in the STEM fields, healthcare, and education.

The numbers speak for themselves: Research from AND indicates that around 40% of UK workers are in roles for which they’re either underqualified or overqualified.

Looking ahead, the outlook is even more concerning: by 2030, an estimated 20% of the UK workforce – approximately 6.5 million people – will be significantly underskilled for their roles (Industrial Strategy Council).

This skills mismatch is projected to cost the UK economy £120 billion in lost output by 2030, with current annual costs already estimated at £39 billion, according to the Learning and Work Institute.

What general skills are Brits falling behind in?

The skills gap is hitting several key areas particularly hard. Here’s a breakdown of the four skill categories most affected:

1. Digital skills

Digital skills face the most severe shortage, currently costing the UK £63 billion in lost potential GDP each year. By 2030, this gap could result in an annual loss of 0.5% GDP growth, amounting to £166 billion in lost GDP per year.

The scale of this problem is a serious cause for concern. Over 80% of all UK job vacancies now require at least one digital skill, making digital proficiency essential across nearly all sectors, not just technology (WorldSkills UK).

UK workers are aware of their digital skills shortage. According to research by AND:

  • A majority (58%) of workers said they had personally felt the negative impact of the digital skills gap
  • 27% of UK employees admitted they lack sufficient digital skills for their current roles
  • 1 in 5 UK professionals (20%) said that their lack of digital skills stopped them from applying for a job
  • 58% of workers reported that their employer has never provided them with digital skills training

Employers share these concerns. WorldSkills UK reports that nearly a quarter (23%) of UK employers believe their staff lack basic digital skills, while 37% say their employees lack advanced digital skills.

And, less than half of UK employers believe that young people entering the workforce have strong enough digital skills.

The problem isn’t just about having the skills – it’s about getting access to training. While demand for digital skills is skyrocketing, the number of people pursuing digital skills training is declining, widening the gap between rising demand and shrinking supply.

2. Leadership-related soft skills

After digital skills, the next most significant gaps are in leadership and management capabilities. These include:

  • Leading and managing others
  • Critical thinking and decision making
  • Advanced communication and negotiation

The Industrial Strategy Council’s research indicates that by 2030, approximately 22 million workers will lack these key leadership and management skills. These soft skills are highly sought after by recruiters, yet little is being done to close this gap.

According to the 2023 Essential Skills Tracker report, half (51%) of the UK workforce has missed out on opportunities to develop essential skills. This failure to invest in critical soft skills costs the UK economy about £22 billion annually.

Notably, nearly half (48%) of UK workers don’t want to be managers at any point in their careers, potentially contributing to this leadership deficit. For those who do aspire to leadership, only 4 in 10 workers (39%) are aiming for managerial or senior positions (CV Genius).

3. STEM and healthcare

There’s an undeniable skills gap across both STEM and healthcare professions. The Industrial Strategy Council projects that 2.7 million workers will lack the necessary skills for their roles in at least one STEM and healthcare subject area by 2030.

Currently, human health and social work positions account for 18% of all UK job vacancies, making it the most significant gap in any sector, according to the Office for National Statistics (2025b). And, the NHS Long Term Workforce Plan estimates a shortfall of approximately 150,000 full-time equivalents in the NHS workforce (Industrial Strategy Council).

Specific sectors are being hit particularly hard:

  • Manufacturing: 80% of employers struggle to find staff with the right skills (The British Institute of Recruiters)
  • Engineering: A shortfall of up to 59,000 for core engineering roles, with 20% of the current workforce set to retire by 2026 (Industrial Strategy Council)
  • Construction: 1 in 3 vacancies are hard to fill, with persistent shortages of bricklayers, carpenters, electricians, and plumbers (Office for National Statistics, 2021)

4. Training and education

The OECD Skills for Jobs 2022 results listed Training and Education as having a large skill shortage in the UK, and the Industrial Strategy Council noted that 4.3 million workers may be underskilled in teaching and training by 2030.

Closing skills gaps in digital proficiency, leadership, STEM, and healthcare requires comprehensive workforce training — but a shortage of qualified trainers presents a major obstacle to the UK’s future competitiveness.

What’s causing the UK skills gap?

Several interconnected factors are driving Britain’s skills crisis:

1. Rapid technological change

Ongoing advancements in technology have outpaced current education and training efforts, leaving a sizable portion of the workforce behind in essential digital competencies.

The rise of automation, AI, and data analytics has shifted many roles’ requirements, leaving individuals who haven’t upskilled struggling to keep pace (WorldSkills UK).

According to CV Genius’s Future of Work Report, the impact of AI is a significant concern for workers, with 68% believing it will increase competition for jobs, and 45% fearing AI will replace them in the future.

This reinforces the need for constant learning, as 91% of workers believe AI will require continuous upskilling to stay competitive, and 84% think knowing how to use AI tools will make them more hireable.

2. Chronic underinvestment in training

UK employers are failing to invest adequately in their workforce.

Employer investment in training has fallen by 28% in real terms since 2005, placing the UK at a significant disadvantage – it invests only half the average per worker in training compared to major European competitors (Learning and Work Institute).

According to The Open University’s Business Barometer report, nearly three-quarters (72%) of UK employees admitted that skills shortages were causing an increased workload on other staff, and 78% reported it was limiting output, profitability, and company growth.

This underinvestment creates a compounding problem where lack of training directly contributes to productivity stagnation and skills gaps.

3. Health-related workforce exodus

The UK is experiencing a critical challenge with escalating numbers of people leaving the workforce due to long-term illness. Since early 2020, this figure has surged by 671,000, reaching a near-record 2.78 million individuals. (Office for National Statistics)

Long COVID has contributed significantly to this trend. By May 2022, almost 2 million people in the UK reported having Long COVID, with 72% indicating the condition limited their daily activities. The aggregate effect is equivalent to 110,000 workers being off sick, resulting in an estimated loss of earnings of almost £1.5 billion per year (Institute for Fiscal Studies, 2022a).

The UK’s Statutory Sick Pay is falling short, replacing only 17% of average weekly earnings — among the least generous in the OECD. Almost half of employers (47%) don’t exceed this statutory minimum, and less than half (48%) offer flexible working arrangements (Financial Times).

4. Post-Brexit immigration changes

The end of free movement has led to a shortfall of approximately 330,000 workers in Britain. While overall migration levels remain at pre-pandemic levels, the post-Brexit system has created a clear reduction in labour supply for certain sectors.

The care sector and transport and storage sector, which historically relied heavily on EU workers, have been severely affected (Centre for European Reform).

Most of the worker shortfall, however, is concentrated in less-skilled sectors. Hospitality businesses are significantly more likely to struggle with vacancies, partly due to reduced EU applicants (Office for National Statistics).

How the UK is fighting back

The government has recognised the severity of these challenges and launched several strategic initiatives to address them.

The ‘Skills for Jobs’ agenda

The cornerstone of the government’s response is the ‘Skills for Jobs’ White Paper, which outlines a blueprint for ensuring individuals can acquire the necessary skills for career progression at any stage of their lives. This includes the Lifetime Skills Guarantee.

Key elements include:

  • By 2030, almost all technical courses will be based on employer-led standards
  • Free Level 3 qualifications for adults aged 24 and over who don’t already have one
  • From 2025, a Lifelong Loan Entitlement equivalent to four years of post-18 education
  • Local Skills Improvement Plans (LSIPs) led by businesses to identify and deliver local skill needs (Department for Education)

Massive sectoral investments

The government has implemented targeted investments to address acute shortages in critical sectors. A prime example is the £600 million investment to train up to 60,000 more skilled construction workers, including:

  • £165 million for colleges to deliver more construction courses
  • £100 million to expand Skills Bootcamps in construction
  • £40 million for new foundation apprenticeships
  • £100 million for 10 new Technical Excellence Colleges (UK Government, 2023)

Digital and AI skills focus

Recognising the critical nature of the digital skills gap, the Department for Science, Innovation and Technology has sought to reduce this deficit through its UK Digital Strategy.

The government has also issued guidance on ‘AI Skills for Business’ to help companies deploy AI safely and effectively (Department for Science, et al.).

Reducing regional inequalities

The UK’s Levelling Up white paper outlined policies aimed at reducing economic imbalances across the UK through various funding mechanisms:

  • £4.8 billion fund for local infrastructure
  • £3.6 billion Towns Fund for 101 towns
  • £3 billion National Skills Fund for apprenticeships
  • £2.6 billion UK Shared Prosperity Fund decentralised to local leaders (UK Government, 2022)

Training investment reforms

Recognising the decline in employer training investment, the government is reforming existing mechanisms. Most recently, as reported by the BBC, the government is shifting the focus of apprenticeship funding towards under-22s, redirecting funds from some courses for older learners to boost entry-level training places.

The ‘Growth and Skills Levy’ will eventually replace the Apprenticeship Levy, allowing businesses to spend up to 50% of their funding on a wider range of training programmes. (For context, the Apprenticeship Levy is an amount paid by employers with an annual pay bill of over £3 million, designed to fund apprenticeship training.)

Additionally, the new ‘Skills Tax Credit’ allows employers to deduct 230% of training costs from their tax bills, with a ‘Super Skills Tax Credit’ allowing 300% deductions in priority areas (Learning and Work Institute)

What this means for employers

The skills gap presents both challenges and opportunities. Employers looking to navigate the challenges of this labour market should:

  • Conduct a skills gap analysis to understand their workforce’s specific needs and identify areas where employees lack proficiency
  • Use surveys, assessments, and performance reviews to gather data for future training and hiring strategies
  • Invest strategically in training beyond compliance requirements
  • Focus on digital, AI, and essential soft skills for all employees as a long-term investment in productivity and retention
  • Embrace flexible working and comprehensive health support systems to retain employees with long-term conditions, reducing economic inactivity
  • Collaborate with education providers by engaging with Local Skills Improvement Plans and educational institutions to shape training programmes to meet their business needs

What this means for employees

The current skills gap presents unique opportunities for career advancement. Here’s how to leverage this situation:

  • Upskill by taking advantage of government initiatives like the Lifetime Skills Guarantee and Lifelong Loan Entitlement
  • Prioritise digital, AI, and other future-oriented skills to remain competitive
  • Develop essential skills like communication, problem-solving, and teamwork. Research shows these skills predict job satisfaction as strongly as income and are associated with a wage premium of £3,600-£4,600 per year
  • Stay ahead of the curve by anticipating your industry’s future skill needs and updating your education and training accordingly

By anticipating the skills needs of their organisation or field, employees can position themselves as valuable assets and create opportunities for career advancement in an increasingly competitive job market.

Conclusion

The UK’s skills gap represents one of the most significant challenges facing the nation’s economic future. With projected costs of £120 billion by 2030 (Learning and Work Institute) and millions of workers lacking the skills needed for their roles, this problem will take coordinated action to address.

However, the government’s comprehensive response through skills reforms, targeted investments show that work is being done. Success will depend on effective collaboration between government, employers, and individuals, underpinned by strategic investment and responsive policy.

Turning these challenges into opportunities for a more skilled, productive, and equitable economy is possible, but it requires sustained commitment and a clear recognition that closing the skills gap is essential to Britain’s long-term prosperity.

Sources

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Nathan Soto
Written by

Nathan Soto

A CV expert & career counsellor, Nathan Soto helps job seekers with practical career advice, especially those following nontraditional career paths. Nathan graduated with a double-honours BA in French and Music, specialising in percussion. As well as providing career and CV-writing advice, he freelances as a Mandarin–English translator and English language coach. In his free time, he enjoys playing marimba and learning new languages.