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New data from the Business Barometer report, published by The Open University in partnership with the British Chambers of Commerce, indicates that nearly two-thirds (62%) of UK organisations continue to report significant skills shortages.
Although there has been a modest improvement from last year’s 73%, the skills gap remains a prevalent issue across all sectors and regions of the UK.
Despite the pressing need, less than one in five (19%) organisations have implemented a written skills plan for their workforce this year. This lack of strategic planning hampers the ability to address current skills shortages and prepare for future demands effectively.
A key area of concern is the lack of confidence in adopting new AI and green technologies, with 64% of organisations reporting challenges in this area. These technologies are crucial for growth and sustainability in the UK economy. The skills shortages and lack of confidence are also impacting staff morale and wellbeing, with 68% of employers noting that shortages have increased employee workloads.
Training and development are critical for addressing these issues. The report found that almost two-fifths (39%) of businesses plan to use mentoring or coaching in the next twelve months to develop skills and create a supportive learning environment. This approach aims to enhance employee attraction, engagement, and retention.
Encouragingly, 86% of organisations using apprenticeship programmes plan to increase or maintain the number of apprenticeships over the next year. This commitment underscores the value of apprenticeships in cultivating new talent and facilitating career changes to address specific skills needs.
However, the report also highlights that a majority of businesses (63%) lack specific recruitment, training, and retention initiatives for underrepresented groups, including young people, older workers, those with disabilities, and neurodiverse individuals. This oversight suggests that organisations may be missing opportunities to expand their talent pools and mitigate skills shortages.
Baroness Martha Lane Fox CBE, Chancellor at The Open University and President of the British Chambers of Commerce, commented: “Despite small signs of improvement, the skills gap remains stubbornly high. This year’s Business Barometer exposes the impact of this enduring challenge, including overwork, diminished productivity, and compromised wellbeing. The critically low confidence in AI and green technology and the lack of strategic plans to engage vital underrepresented groups are concerning. By fostering innovative strategies and inclusive initiatives, we can bridge the skills gap and build a more resilient workforce.”
Viren Patel, Director of Employers and Partnerships at The Open University, added: “Skills shortages are impacting businesses and staff across the country. Employers need to plan effectively and implement flexible, inclusive initiatives to develop and retain existing talent and attract more diverse groups into the workforce. With the majority (70%) of students at The Open University currently working full or part-time during their studies, we are well equipped to support organisations through the skills shortage, offering flexible courses and utilising the latest online technology to fit around business priorities and personal responsibilities.”
The report underscores the urgent need for UK businesses to adopt strategic and inclusive approaches to skills development, particularly in emerging fields like AI and green technologies, to ensure future growth and sustainability.