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More than one in three employers say a shortage of employability skills is holding back productivity and business growth, according to new research from City & Guilds.
In the report, Counting the Cost: The UK’s Employability Skills Crisis, 38% of employers said shortages in skills such as face-to-face communication, problem-solving and time management are restricting productivity.
Nearly two-thirds (64%) also said candidates with these skills are becoming harder to find.
Employers reported a range of consequences, including operational errors and delays (37%), increased staff turnover and low morale (37%), lower efficiency (33%) and poorer customer service (29%).
The findings come as employers increasingly turn to artificial intelligence in recruitment. Some 43% of employers surveyed said they use AI to screen or filter candidates, while 69% believe these tools prioritise technical skills over the human capabilities they say businesses need.
The research suggests this could create a disconnect between the skills employers are looking for and how candidates are assessed during recruitment.
Nearly three-quarters (74%) of employers said employability skills are now more important than technical expertise for workplace success, as AI takes on more routine tasks.
Prospects in an AI labour market
The research, based on surveys of 908 UK HR professionals and line managers and 1,014 18- to 24-year-olds, also highlights concerns among young people about their prospects in an increasingly AI-driven labour market.
More than half (51%) said they were worried AI would reduce job opportunities for people their age, while 41% said they were already using AI to improve their work and communication skills.
Confidence in face-to-face communication was also an issue, with just 40% of young people saying they felt completely confident in this area.
Among those not in education, employment or training (NEET), 34% lacked confidence in presenting themselves professionally, compared with 17% of those in employment.
The research found a marked difference among apprentices. Almost half (48%) said they felt completely confident in their face-to-face communication skills, while 74% had received dedicated employability skills training – the highest proportion of any group surveyed.
The role of vocational training
Andy Moss, interim chief executive of City & Guilds, said employers were reporting that communication, problem-solving and time management skills were “just as important as technical know-how, if not more”.
He added that apprenticeships and vocational training could play an important role in developing these capabilities by combining practical experience with communication, problem-solving and teamwork.
City & Guilds is calling on employers to invest in employability skills through onboarding, early careers programmes and mentoring, as well as reviewing how
AI-driven recruitment tools assess candidates.
It also wants education and training providers to embed employability skills earlier, while policymakers should give employers greater flexibility to invest in these skills alongside technical training.
The report comes as more than one million young people in the UK are classified as NEET.
Read the full City & Guilds report here.
