Almost half of employers are upskilling their workers in the wake of labour market and legislative challenges

The CIPD’s latest ‘Resourcing and talent planning report’, supported by Omni RMS, has found that some organisations are rethinking how to attract, retain, and develop skilled talent in response to the changing world of work.

The findings of the report, which surveyed just over 1000 UK employers with HR decision-making responsibilities, found that upskilling existing employees has come to the forefront in light of a cooling labour market, skills shortages, and the impact of new workers’ rights legislations. Key findings include:

• 48% of employers have reported to increase their efforts to developtalent in-house over the last year. Increasing learning and development opportunities was one of the most common steps employers that introduced initiatives took to improve retention (45%), with 44% of employers reporting that talent has been more difficult to retain. 
• 58% of employers reported anincrease in the number of unsuitable candidates applying for jobs over the last year.
• Just over half (53%) of organisations that attempted to recruit in the last year said they have experienced difficulties attracting candidates, particularly for senior and skilled positions.

The findings suggest that upskilling people in-house has become a key pathway for employers to plug the skills gap in the labour market, with 91% already doing this or considering it as an option in future, which highlights the range of challenges organisations face when recruiting. In response, the CIPD and Omni are encouraging employers to review their critical skills, taking a strategic approach to workforce planning to weather the current and coming resourcing challenges.

The greater focus on upskilling as opposed to recruiting to fill skills gaps might also reflect concerns some employers have about new legislation on workers' rights. Most employers surveyed believe that the measures introduced in the new Employment Rights Act 2025 will increase their employment costs (14% to a large extent, 40% to some extent).

With the challenge of increased unsuitable candidates and as hiring budgets tighten, employers cannot afford to compromise on the calibre of people they bring in, making rigorous assessment and a clear view of critical capability more important than ever.

Additionally, a quarter (26%) of employers expect to recruit fewer workers due to the anticipated employment costs of the new legislation, with a fifth (20%) less likely to hire workers who need additional support as a result.​ 

Claire McCartney, Senior Policy Advisor at the CIPD, said:

“The findings of our report suggest that in order to be future-ready and retain skilled employees, organisations should prioritise strategic workforce planning and in-house development programmes to upskill existing employees in priority areas.

“However, organisations should also not forget about pathways to employment for new and returning workers, making sure to invest in ways for people to access opportunities through apprenticeships, traineeships, industry placements, and post-A-level routes. ​ 

“The world of work is rapidly changing as a result of new legislation, technological advancements and mounting global pressures. It’s clear that the best way for organisations to weather these storms and stay competitive is by investing in their people.”

Louise Shaw, CEO at Omni RMS, said:

“The findings highlight a clear challenge for employers. While talent is increasingly recognised as a strategic priority, many organisations are still making workforce decisions reactively. In a more complex labour market, attracting applications is no longer the problem - identifying, assessing and developing the right capability is. The organisations that will succeed are those that take a longer-term view of workforce planning, build critical skills internally and make evidence-based decisions about where capability is best developed, hired or acquired.”

Positively, pathways to employment, especially for younger workers, are already being pursued by organisations to bridge the skill gap. Half of surveyed employers (52%) already offer apprenticeships, while 43% offer graduate programmes. Looking ahead, a fifth (20%) of organisations reported plans to increase their recruitment of specifically younger workers (aged 18-24) over the next year. Employers were most likely to cite securing a future talent pipeline (40%) and ensuring access to key digital skills (40%) as reasons for these plans.

Employer attitudes towards recruitment and the skill gap align with the picture of the current slower job market, where redundancies have increased 10 percentage points from 2024 and 27% of employers have reported redundancies in the last year. More organisations surveyed also reduced (28%) than increased (22%) their recruitment of permanent employees over the last year.