UK Labour market – it’s not a digital skills gap, it’s a chasm
The need for digital skills is increasing across the economy, but millions of UK workers lack the technical skills required of a modern workforce.
From retail, healthcare and hospitality to engineering, manufacturing, marketing and more, work time now means screen time for millions of UK workers. Where advanced technologies and the digital skill requirements to manage them were once restricted to hi-tech organisations, now almost every UK business needs employees who can work well with a computer.
+£300 billion per year
Projected boost to the UK economy from artificial intelligence (AI) by 2050
Source: Tony Blair Institute 2024
Regardless of whether you’re positive or negative on the outcome, advanced technologies are transforming the UK labour market, altering both the skills businesses require and the way people work. Remote working and digital collaboration have become standard (and expected), enabling employees to work from anywhere while maintaining seamless communication through cloud-based platforms. Meanwhile, businesses are leveraging software to track productivity, measure engagement and optimise efficiency. Automation and AI are reducing repetitive tasks such as data entry and filing, while also reducing risks in hazardous sectors such as construction, mining and manufacturing.
The downside
In most cases, the impact of technology on work has been beneficial. However, as routine tasks decline, demand for specialised skills grows. Employers now seek a higher mix of skills from candidates as the world of work becomes more complex. Workers are expected be able to do more, produce more and know more as demand for digitally proficient workers reaches an all-time high.
Unfortunately, the divide between the level of technological competence that businesses need and what’s currently available in the UK workforce is daunting. The fact is, there simply aren’t enough digitally competent workers to go round.
60%
Of the UK’s workforce is unable to do all 20 digital tasks industry and government have defined as essential for work.
Source: FutureDotNow 2024
Digital growth is accelerating:
- 80% of organisations fast-tracked their digital transformation during and after the pandemic
- 89% of manufacturing companies were using AI by the end of 2024
- The machine-learning market is expected to grow by 34.8% per year to 2030
But:
- 10 million workers lack the basic digital skills to meet modern job requirements
And:
- Only 23% of the UK workforce report having had digital training from their employer.
It is estimated that the digital skills gap currently costs the UK economy £63 billion per year – a number that will likely escalate if businesses continue to struggle to secure the talent they need. Meanwhile education plans to address the UK’s lack of digital skills show promise, but this initiative (and others like it) are long-term solutions. In the near and mid-term, businesses are on their own, which means getting ahead of the digital skills gap by exploring and exploiting every talent avenue. Organisations must adopt a strategic approach that matches a detailed and closely co-ordinated recruitment, retention and reskilling plan to the long-term objectives of the business to secure the skills they need.
Closing the digital skills gap
Organisations must explore innovative workforce 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.
Key benefits:
- Avoid the last-minute rush for new skills
- Gain a competitive advantage
- Maintain productivity
Anticipate your future skills needs
To stay competitive, businesses must anticipate their future digital skill needs and shape their talent pipeline to meet those requirements. A skills audit of your entire workforce is essential to this task, as it’s the only way to gain a clear picture of your existing and future capabilities and identify the gaps.
Key benefits:
- Identify skills gaps earlier
- Discover hidden skill sets
- Make more of transferable skills across your workforce
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.
Key benefits:
- Make your business the employer of choice
- Increase employee engagement
- Support your brand proposition
Widen your talent search
Too many businesses keep a narrow focus on where they look for digital 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.
Key benefits:
- Stay ahead of your competitors
- Find skills the others overlook
- Reduce hiring costs and time to hire
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.
Key benefits:
- Stay on top of new and emerging skill sets
- Future-proof your workforce
- Expand your pool of potential candidates
Apprenticeships can support your talent pipeline
Apprenticeship programmes are a powerful way to develop a strong talent pipeline, ensuring businesses have the diverse skills needed for future success. By training employees from the ground up, organisations can tailor their development to align with company-specific practices, fostering higher productivity and reducing errors. Investing in apprenticeships can help businesses to future-proof their workforce and cultivate a loyal, skilled team that drives long-term success.
Key benefits:
- Grow the skills you’ll need in the future
- Foster high employee engagement
- Support employee retention
Ensure your workforce operates with high efficiency to add value to your business
Greater workforce efficiency can drive down costs while enhancing business value. Workforce optimisation involves leveraging data to streamline processes, improve productivity and reduce waste.By measuring output, businesses can identify inefficiencies and implement targeted improvements. Enhanced manager-worker communication ensures tasks are clearly defined, reducing errors and delays. Better employee scheduling and time management can prevent burnout while maximising resource allocation.
A strategic workforce optimisation approach can deliver lower operational costs, improved employee satisfaction and a more agile organisation – ultimately driving sustainable growth and a competitive advantage.
Key benefits:
- Reduce costs and boost productivity
- Reduce worker burnout
- Do more with what you have
Manpower – improving the way your workforce works
UK businesses will face persistent digital 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.
Download the Manpower Labour Market 2025 Skills and Talent Trends Report
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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.
