There are concerns among UK businesses about future skills shortages as a wave of retirements approache, with 57 percent of experienced frontline workers expected to retire within the next five years.
A study from frontline employee app Flip, in partnership with Workplace Intelligence, found that 68 percent of managers fear that critical expertise will be lost and that 78 percent of managers lack confidence in their company’s ability to address future skills gaps. The retail sector alone could face losses of up to £28 billion due to these skills shortages.
The findings coincide with the latest CIPD Labour Market Outlook, which identifies retail as the sector most affected by declining recruitment and employee engagement. Employer confidence has also declined, with nearly a third of businesses planning job cuts through redundancies or reduced hiring.
Productivity Already Affected by Skills Gaps
The study, which surveyed 500 UK frontline managers and employees in retail and manufacturing, highlights existing productivity challenges caused by skills shortages. Employees spend an average of 12 hours per week – equivalent to nearly four months per year – assisting colleagues who lack key skills.
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Nearly three in four (72%) managers report that skills gaps are already reducing efficiency, while 73 percent say they rely on a small group of experienced employees to maintain operations. This dependence increases the risk of bottlenecks and burnout.
A majority (81%) of UK managers acknowledge that technical expertise is concentrated among older workers, making their departure a risk to business continuity in the face of a retiring workforce. As these employees near retirement, companies face a growing challenge in preserving institutional knowledge.
Generational Divide in Workforce Skills
The research noted a widening skills gap between generations. While older workers hold critical operational knowledge, many lack the time and tools to pass it on effectively. At the same time, 92 percent of UK managers report that Gen Z employees (under 25) do not yet have all the technical skills needed to perform effectively.
This disconnect is affecting retention. More than half (57%) of Gen Z frontline workers feel their skills are overlooked due to their age and 63 percent believe they need to leave their industry to progress in their careers. These findings suggest that businesses are struggling to develop and retain their future workforce.
Benedikt Brand, co-founder and CEO of Flip, warns of the long-term risks.
“Industries that form the backbone of our economies are facing a cliff edge when it comes to critical skills. It’s vital that businesses capture the invaluable expertise of retiring employees and make meaningful investments into developing the Gen Z employees who make up their future workforce. Without seamless knowledge transfer between generations, productivity will stall and these essential industries will suffer.”
Addressing Workforce Challenges
Dan Schawbel, Managing Partner at Workplace Intelligence, urged businesses to take action.
“The new generation gap isn’t just about age – it’s who has essential work skills and who doesn’t. The research shows many employers aren’t doing enough to pass knowledge on to younger workers before older employees retire.”
He notes that while experienced workers are willing to support new hires, they often lack the necessary time and tools to train effectively. If businesses fail to address these challenges, they risk long-term skills shortages that could weaken operational efficiency and slow economic growth.
