The UK labour market presents a split personality

Recruitment may be easier, but thousands of businesses still can’t find the skills they need

First, the good news – the nation’s long-running talent shortage may finally have peaked. In Q1 2025, 76% of surveyed firms reported challenges in filling roles, down from 80% in 2024.

And now the bad news – more than three quarters of UK businesses still can’t find the skills they need. A mix of role complexity, changing job expectations, early retirement of experienced workers and the rapid digitisation of the economy are driving high demand for workers who have the skills to thrive in a transforming labour market. Competition for talent is further intensified by the fact that many college leavers are not ready for the world of work. While UK educational institutions continue to graduate thousands of students per year, more than 70% of surveyed employers report that these individuals are inadequately prepared for the demands of the workforce. Graduates often lack the skills to navigate complex, real-world challenges, leaving businesses scrambling to upskill new hires or continuously compete for experienced professionals.

The UK skills shortage, how tough is it?

It doesn’t matter where your business is located, what your business does or where your market is, the impact of the skills shortage is deep and widespread:

• 77% of engineering businesses cannot find the skills they need
• 200,000 more HGV drivers will be needed over the next five years
• 58% of automotive aftercare operators (garages) cannot recruit sufficient technicians
• 97% of manufacturers say that hiring and retaining skilled labour presents a challenge to the growth of their business
• 54% of logistics companies are expecting skills shortages to increase over the next five years, 21% are uncertain as to their future recruitment ability, and only 4% expect the skills shortage to improve
• 90% of employers in the renewable energy and low-carbon sectors cite a lack of suitable skills as a barrier to growth

Ultimately, the UK’s skill shortage is damaging the nation’s economy and creating barriers to innovation and growth for thousands of businesses. With no grand rescue plan on the horizon, many organisations will have no option but to entirely reshape their approach to workforce development to secure the skills they need.

From hiring to thriving: Empower your workforce by building skills, not just filling roles

Organisations must explore innovative solutions to close the skills gap in 2025.

Identify skills trends as soon as they emerge

As disruptive technologies and innovative work methods reshape entire industries, skills that are essential today will soon become outdated. Meanwhile, the skill sets for tomorrow are always over-subscribed. The only solution to this conundrum is to be first to the party. Organisations must adopt a forward-thinking strategy – continuously monitoring market trends, competitor activities, technological developments and valuable feedback from employees and job candidates to spot emerging skills trends early and adapt accordingly.

Anticipate future skills demands

Staying competitive means looking ahead. Businesses need to proactively identify the skills they’ll require in the future and align their talent strategy accordingly. Conducting a comprehensive skills audit across the workforce is key to this process – it provides a clear understanding of current capabilities, uncovers gaps and highlights development priorities. To be effective, this audit should encompass hard skills, soft skills, and transferable skills alike.

Ensure your EVP provides a winning offer

Your Employer Value Proposition (EVP) is the secret sauce that makes employees and candidates love working for your organisation and it can be the difference between a surplus of top job candidates and a dearth of much-needed skills.

Ensuring your EVP matches up is essential. This means measuring your offer against your competitors. It’s not enough for your EVP to match them – it must exceed them. Demonstrate and proof-point your EVP throughout the candidate and employee journey. Ensure people can confidently recognise and reference distinctive reasons to join and stay with your business.

Widen your talent search

Too many businesses keep a narrow focus on where they look for talent, often fishing in the same talent pool as their competitors.

Instead, organisations must embrace a skills-based hiring strategy. This means cultivating a diverse and inclusive approach to talent to address the UK’s changing demographics, mining closely aligned industries, considering candidates at different points in their careers (such as seasoned workers) and the deployment of specialist contract workers wherever necessary.

Prioritise skills over experience

Skills are assets that add value to your business, and they don’t always come with time served. This is not to downgrade the value of experience, but it should be cast against the future potential that hard-to-find skills may demonstrate.

Prioritising skills over past experience can help your business stay competitive in a rapidly evolving landscape, as job experiences can become outdated as industries shift.

Support your talent pipeline with apprenticeships

Apprenticeship programmes offer a strategic way to build a resilient talent pipeline, equipping businesses with the diverse skills essential for future growth. By developing employees from the ground up, organisations can align training with their unique processes and culture – boosting productivity and minimising mistakes. Investing in apprenticeships not only future-proofs the workforce but also fosters loyalty and long-term success through a highly skilled and committed team.

Maximise workforce efficiency to drive business value

Boosting workforce efficiency is a powerful way to reduce costs and increase overall business impact. Workforce optimisation means using data-driven insights to refine processes, enhance productivity and eliminate waste. By tracking performance and output, businesses can pinpoint inefficiencies and apply targeted solutions. Clear communication between managers and employees helps ensure tasks are well-defined, minimising errors and delays. Smart scheduling and effective time management also help prevent burnout while optimising resource use.

A strategic approach to workforce optimisation leads to lower operational costs, higher employee satisfaction and a more agile, competitive organisation – laying the foundation for long-term, sustainable growth.

Manpower – improving the way your workforce works

UK businesses will face persistent skills shortages in 2025, with organisations of all sizes struggling to secure essential talent. Organisations that fully understand their local market’shiring trends, keep track of talent competitors and understand the true costs and efficiencies of their workforce will be best positioned to succeed. Manpower can help your business identify the people you need now as well as predict and pre-empt the skills you’ll need for the future. We have the experienced recruiters, the leading data and the valuable insights necessary to deliver qualified, in-demand talent at scale for today and tomorrow.

Find out how Manpower can support your business now:

Download the Manpower Labour Market 2025 Skills and Talent Trends Report

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