The Open University’s 2025 Business Barometer paints a picture of an ongoing skills crisis, with over half of UK employers reporting current shortages and nearly a third expecting the situation to worsen over five years. Despite urgency, less than half have a written plan to address skills needs.
The report, based on surveys of 2,000 senior decision-makers and 1,000 Gen Z respondents, reveals a widening disconnect between what employers expect and how younger workers approach their careers. While 71% of Gen Z say they consider wider skills shortages when planning their own future, 35% of employers blame younger generations for lacking work readiness; 29% believe they are uninterested in their sector.
Key findings
- 54% of UK employers report current skills shortages
- Only 46% have a written plan for future skills
- 29% cite budget constraints as a barrier to training
- 25% worry staff will leave after training
- 71% of Gen Z consider UK skills gaps in their career planning
- 48% of Gen Z are working in or interested in AI
- 35% of employers say Gen Z lacks work readiness
- 69% of Gen Z are more likely to stay with an employer that offers training
- 1 in 5 employers lack confidence in delivering AI plans
Released just days after the government’s £275 million investment in technical training and apprenticeships, and following the earlier June announcement of £187 million for digital and AI skills, the research underlines the scale and complexity of the UK’s workforce challenge. While policy attention is growing, the OU’s findings point to the need for employers to take a more strategic and long-term approach to talent development.
The report highlights cost pressures, recruitment uncertainty and a narrow approach to inclusion as key barriers to progress. Twenty-nine per cent of employers cite budget constraints as a reason for underinvesting in training, while one in four fear that staff will leave after being trained. And while most say diversity is important, nearly a quarter have no specific inclusion measures in place.
AI, sustainability and digital transformation are flagged as critical areas of concern. One in five employers are not confident they can deliver their AI technology plans over the next five years. At the same time, 48% of Gen Z respondents say they are already working in or interested in AI.
The OU calls on employers to respond with bold leadership, developing written skills plans, tapping into underused talent pools, working with education providers and targeting areas where Gen Z interest overlaps with business need. The report also points to the value of training for retention, 69% of Gen Z say they are more likely to stay with an employer that offers development opportunities.
For L&D professionals, the message is employer expectations are rising, policy focus is intensifying and young workers are signalling a desire to contribute. But strategic intent and operational readiness still lag. Bridging that gap will require more than reactive hiring or ad hoc upskilling, it demands investment, coordination and culture change.