Closing the Skills Gap: Why Workforce Needs To Evolve
New research by SD Worx underscores a growing challenge for employers: uncertainty around the future capabilities their organisations will require. At the centre of this issue is a persistent and widening skills gap, which continues to limit confidence in long-term workforce planning. Almost one-third of businesses (30.8%) acknowledge they lack a clear understanding of the competencies required over the next few years, even though almost 6 in 10 (59.7%) identify workforce planning as a strategic priority.
Key Points
- The UK skills gap is widening, with 30.8% of employers lacking clarity on future workforce capabilities.
- Despite 59.7% prioritising workforce planning, many organisations still struggle to address the skills gap effectively.
- AI and automation are accelerating change, intensifying the skills gap in digital, data, and technical roles.
- Employee development is lagging, with limited internal mobility contributing to the ongoing skills gap.
- Technology friction is reducing productivity, highlighting that tools alone cannot resolve the skills gap.
- Closing the skills gap requires investment in reskilling, better workforce planning, and stronger governance around AI use.
This tension reflects a broader shift in how organisations approach workforce strategy. Traditional role-based models are gradually being replaced by skills-led frameworks designed to better address the skills gap. Today, over half of employers adopt a hybrid approach, considering both roles and skills, while roughly a quarter prioritise skills alone. However, a concerning minority (7.3%) still operate without any structured workforce planning, further exacerbating the skills gap.
Several factors are driving the urgency to modernise workforce strategies. Organisations are striving to ensure adequate staffing, improve operational efficiency, manage labour costs, and maintain service continuity, all while navigating rising employee turnover and increasingly complex regulatory environments. At the same time, the accelerating impact of automation and AI is reshaping workforce priorities, intensifying the skills gap in critical areas such as digital, data, and technical capabilities. Nearly one-third of UK employers are actively preparing for these technological shifts (30.4%), placing them ahead of the European average (26.1%).
Despite this forward-looking investment, a disconnect persists at the employee level. While almost two-thirds of workers express a strong desire to learn and grow, fewer than half feel they have meaningful opportunities for development or internal mobility. This highlights a key dimension of the skills gap: it is not only about shortages, but also about the underutilisation of existing talent. Limited visibility of career pathways and insufficient reskilling opportunities continue to reinforce the skills gap within organisations.
Technology is playing an increasingly central role in workforce management. Most UK managers report having access to the tools they need for effective planning (67.9%), at higher levels than seen across Europe (60.8%). Yet only 43.2% believe workforce planning should combine human judgment with technology, rather than rely predominantly on automation (25.7%). This ongoing debate reflects a deeper challenge: without the right capabilities in place, technology alone cannot close the skills gap.
The skills gap is no longer a distant concern, it is already constraining business performance across the UK. More than half of employers report persistent skills gaps, while a significant share of vacancies remain unfilled due to capability gaps. At the same time, rapid advances in AI are reshaping job requirements, with most organisations (97%) now facing at least one AI-related skills gap. Closing the skills gap will require sustained investment in reskilling, stronger workforce planning, and a more agile, skills-first approach to talent development.
Technology Friction Undermines Productivity Despite the AI Boom
While investment in AI continues to surge, a new report compiled by WalkMe suggests that "technology friction" is significantly undermining productivity, and, in many cases, worsening the skills gap within organisations.
According to the new report, employees now lose an average of 51 working days per year navigating and struggling with digital tools, a sharp reversal of previous gains as rapid AI deployment introduces new complexities. This highlights a critical issue: organisations are investing in technology faster than they are addressing the skills gap required to support effective adoption.
At the heart of the problem lies a widening trust gap between leadership and employees. While 61% of executives express confidence in using AI for critical business decisions, only 9% of employees share that trust. A similar disconnect exists in perceptions of digital enablement: nearly 90% of leaders believe their workforce has adequate tools, yet just 21% of employees agree. In practice, this disconnect reinforces the skills gap, limiting both adoption and impact.
This misalignment is driving counterproductive behaviours. More than half of employees report bypassing approved tools in favour of manual processes within the past month, while a third have not engaged with AI tools at all. These behaviours are a direct manifestation of the skills gap, where lack of capability or confidence leads to inefficiency. As a result, time lost to digital inefficiencies has increased by 42% year-on-year, despite a 38% rise in enterprise technology spending, much of which has failed to deliver anticipated returns.
Compounding the issue is a lack of clarity around AI usage policies. In the absence of clear guidance, “shadow AI” has proliferated, with nearly half of employees admitting to using unauthorised tools, often involving sensitive data. This trend further exposes the operational risks associated with an unmanaged skills gap, particularly in areas of governance and compliance.
Accordingly, employees are often left navigating unclear expectations, limited training, and poorly integrated tools, challenges that cannot be solved through technology investment alone. Closing the underlying skills gap is essential, requiring clear guidance on approved tools, transparent usage policies, and targeted capability development. Ultimately, bridging the divide between technological ambition and operational reality depends on aligning tools with user needs, building trust, and strengthening workforce capabilities. Organisations that take this approach will be better positioned to reduce the skills gap, unlock productivity, and realise the full value of their AI investments.
The skills shortages underpinning digital adoption is becoming a critical barrier to realising AI’s value. Research shows that 92% of organisations plan to increase AI investment, yet only a small proportion feel their workforce is fully prepared to use it effectively. At the same time, the majority of businesses report ongoing digital skills shortages, particularly in advanced and AI-related capabilities. Without addressing these skills shortages, technology investments will continue to underperform. Organisations that prioritise capability building alongside AI adoption will be far better positioned to translate innovation into sustained productivity gains.
Employers: What This Means
- Audit current workforce capabilities to identify and quantify the skills gap across key roles.
- Prioritise reskilling and upskilling programmes to address critical areas of the skills gap, particularly in AI and digital skills.
- Implement clear governance and guidance on AI tools to reduce risk and limit shadow AI usage.
- Align workforce planning with business strategy by adopting a skills-based approach to close the skills gap sustainably.
