There is a growing disconnect between UK employers and Gen Z workers that may be hindering efforts to address persistent skills shortages. Over half (54%) of organisations currently face a skills shortage – yet only 33 percent have initiatives to recruit, retain or train under-25s, according to a new report.
The report, published by The Open University as part of The Business Barometer: Skills for today and tomorrow, also found that Gen Z candidates are acutely aware of these gaps and are shaping their career choices accordingly. Seventy-one percent of that cohort say they consider careers based on where skills are most needed in the UK, while 69 percent would stay longer with an employer offering training and development.
However, despite these positive attitudes, 61 percent of Gen Z respondents report they have never been told they lack specific skills, even though 35 percent of employers cite lack of “work readiness” as a top barrier to filling roles.
The report warns that this mismatch comes as digital, AI and sustainability skills become more crucial. Almost half of Gen Z (48%) are already working in or interested in AI roles, yet 20 percent of employers say they lack confidence in delivering AI strategies over the next five years due to talent constraints.
Baroness Martha Lane Fox CBE, Chancellor at The Open University, said, “Employers have an incredible opportunity – and responsibility – to shape the future workforce. The talent is out there. Young people are motivated, they’re digitally savvy and they want to contribute. But they need clear training pathways, practical support and employers willing to invest.”
Gen Z motivation meets the employer action gap
Despite widespread support for equality, diversity and inclusion, the report finds that 23 percent of organisations have no initiatives for under-represented or disadvantaged groups, including returners, career changers and workers with disabilities or neurodiversities. Yet 84 percent of employers say ED&I is important to their organisation and half believe it will grow in importance over the next five years.
Phil Kenmore, Director of Corporate Development and Partnerships at The Open University, said, “The data is clear: there’s a mismatch between employer intentions and practical action. But there’s also a real opportunity here. Employers can start by building structured skills plans, working with education providers, investing in flexible training and opening up opportunities to more diverse talent. The organisations who act now – who build learning into their plans at every level – will be the ones who thrive in the years ahead.”
The Barometer has tracked the UK skills shortage for nearly a decade. While the overall proportion of employers facing shortages has stabilised since last year, the problem remains widespread across sectors and regions. Nearly a third (32%) expect the skills gap to worsen over the next five years. Among affected organisations, 40 percent report increased workloads on other staff, 33 percent cite reduced productivity and 30 percent say they have scaled back growth or expansion plans.
Cost pressures also play a role: 61 percent say higher National Insurance makes recruitment or training more difficult and 54 percent point to a higher National Living Wage.
Addressing skills shortages through inclusive training
Despite the clear impact of skills shortages, fewer than half of employers (46%) have a formal skills plan. Even though training is shown to boost retention, 26 percent of organisations fear that investing in training will prompt staff to leave. The report urges firms to overcome this barrier by demonstrating career progression and linking development programmes directly to future roles.
Baroness Lane Fox warned, “While there are economic challenges at this moment for employers, the smartest organisations won’t just wait for skills to arrive – they’ll build them, inclusively and proactively, to fuel growth and resilience.”
The Barometer calls on business leaders to partner with education providers, design clear career pathways and commit resources to training, ensuring Gen Z talent is both work-ready and engaged.
