Skills development in the UK workplace

In today’s competitive and fast-changing world, the skills and capabilities of the workforce are vital to economic sustainability and growth. Workplace skills include the ability to:

• Write and understand reports.
• Perform numerical and analytical tasks.
• Use computers technology to help solve problems.
• Carry out job-specific technical tasks.

There’s a growing recognition that ‘essential skills’ are vital. These are the widely transferable skills such as communication, team working and problem-solving that all workers need in modern workplaces. They are fundamental to people working together effectively, as well as to how they engage with customers and other external stakeholders. These skills apply to all jobs even though new technologies are changing some technical aspects of work. Previously, efforts to build these skills from education and into the workplace were hampered by the lack of a clear and common framework to define, measure, and assess these skills. That’s why the CIPD joined other leading organisations to champion a united approach and help develop a clear framework for assessing and developing these essential skills, to provide individuals and employers with the tools they need to succeed in the future workplace.

Our recent report Lifelong learning in the reskilling era highlights just how critical it is to embed a culture of continuous learning across the workforce. The research found that up to a third of UK workers will need to reskill in the next five years to keep pace with changes in their jobs, yet access to training opportunities remains uneven—particularly for older workers, those in lower-skilled roles, and people employed in smaller firms. The report argues that without targeted action to overcome these barriers, the UK risks widening inequalities in access to skills development, undermining productivity and inclusion. To build resilience in the face of technological change, demographic ageing and the green transition, employers and government must work together to ensure reskilling is accessible to all.

Skills are not the same as qualifications, although they are often treated interchangeably. However, the process of gaining a qualification undoubtedly builds on and improves skills. Qualifications also provide specialist knowledge and they signal a wide range of desirable attributes to employers. These complement, but are distinct from, the generic skills we use in the workplace. Both qualifications and skills matter, as a workforce with a low level of qualifications is also one likely to have low levels of skills.
Skills are important for:

• Economic growth and prosperity - The economic prosperity of a country depends on how many people are in work and how productive they are in the workplace. Better use of skills available in the workforce, alongside increased investment in skills and training, has been shown to improve productivity. Growth in productivity and prosperity build the conditions for improvements in real earnings, creating a ‘virtuous’ cycle.
• Individuals and organisations - For the individual, skills determine their employment and earning potential. For organisations, skills are vital to meeting both current and future business demands. To be successful and competitive, businesses must ensure their talent management and succession planning take into consideration what skills need to be sourced, nurtured, developed and retained now, in order to create successful and productive workforces of the future.

To tackle the UK’s underlying skills deficit, it’s not enough to focus on initial education and training. The vast majority of the future workforce are already in work. Employers must understand the importance of investing in and improving the skill levels of employees, including learning ‘in the flow’ of work, in-house development programmes and coaching. It’s important that these activities are underpinned by a culture where learning is not only embedded, but encouraged across every level of the organisation.

At a national level, too many UK businesses are built around low-skilled, low value jobs. Employers often design and structure work in a way that limits their staff’s use of skills resulting in skills-to-job mismatches and stagnant productivity. The UK also suffers from poor basic skills, weakness in the vocational education system and low investment in workplace training.

Improving how skills are both developed and used is at the heart of addressing the UK’s low productivity level and the associated high proportion of low-skilled and low-paid jobs in the economy. This needs better leadership and management capabilities, and better people management practices. Our report Over-skilled and underused: Investigating the untapped potential of UK skills found that more than one-third of workers have the skills to cope with more demanding duties than they currently have. At the opposite end of the scale, one in 10 said they lacked all the skills needed to do their job effectively. Reducing this skills mismatch would help improve UK productivity. Analysis by the OECD suggests that average labour productivity could be increased by as much as 5% if the level of skills mismatch in the UK was brought into line with OECD best practice levels.

Organisations, in particular SMEs, need support to invest and develop their HR and people management capability to enable them to invest in their workforce’s skills and make best use of existing capabilities. We’ve been working to support small firms improve their leadership and management capabilities through our People Skills pilots - our report Building HR capability in UK small firms sets out the key lessons for policy makers and practitioners.

It could be argued that successive governments have focused on expanding the higher education system at the expense of further and vocational education. The OECD has identified a gap in the UK in terms of the provision of intermediate and technical level skills. Whilst the UK government has prioritised increasing the number of apprentices, the overall budget for post-16 provision has experienced significant funding cuts.

The UK’s skills policy needs to address the following challenges:

• Upgrade skill levels.
• Raise the demand for skills among employers.
• Improve the quality of apprenticeships, further education and skills training.
• Encourage better working practices with an emphasis on developing and enhancing skills, and the experience at work.
• Improve leadership and people management competencies.

Skills policy in the UK is devolved which means that any policy initiatives are entirely the remit of the devolved administrations in Scotland, Wales and Northern Ireland, and only of the UK government when it comes to England. We explored some of these key differences in our report Devolution and evolution in skills policy: Finding common ground across the four nations.  

The approach to skills policy in each of the four nations within the UK is different. However there are some common core themes and approaches including:

• Improved careers advice.
• Simplified and responsive further education (FE).
• Increasing the number of apprenticeships.
• Increased employer involvement in the skills system.
• Targeted support for skill-development in SMEs.

The main development in skills policy in England recently has been the focus on apprenticeships and technical and further education. 

Apprenticeships have undergone significant reform in recent decades, including the development of employer-led apprenticeship standards and reforms to apprenticeship funding. 

A key aspect of this policy was introducing the apprenticeship levy in April 2017. The levy was designed to boost the number of apprenticeships and overall expenditure on training, yet our research (archived member-only resource) shows that the number of apprenticeships has collapsed and employer investment in training has continued to decline

We have also raised concerns that the apprenticeship system is not functioning as well as it could for young people. The majority of apprenticeships are allocated to existing employees over new labour market entrants, with an increasing proportion of opportunities going to those aged 25 and over. The introduction of the apprenticeship levy has tended to intensify long-running trends, with many employers concentrating their investment on existing employees through, for example, professional and managerial apprenticeships. This underscores the need to rebalance the apprenticeship system so that young people can access a greater share of apprenticeship opportunities.

The Labour government has announced that the Apprenticeship Levy will be reformed into a more flexible ‘Growth and Skills Levy’. The CIPD has led calls for this reform, which has the potential to help reverse the long-term decline in employer investment in training and the collapse in apprenticeships for young people since the introduction of the current levy in 2017.

Labour has also committed to establishing a ‘Youth Guarantee’ of an apprenticeship place, training or support to find work for all 18-21-year-olds, initially being developed in eight ‘trailblazer’ areas across England. But much more action will be needed to create sufficient apprenticeship opportunities for young people to improve social mobility and address technical skills shortages. The CIPD has called for the introduction of an Apprenticeship Guarantee which would provide an apprenticeship place at level 2 or level 3 for all 16–24-year-olds with the necessary minimum qualifications. This could hugely boost the number of vocational pathways into employment and provide more choice for young people.

Contacts

Education & Skills Funding Agency

T Levels: Industry placements

Employing an apprentice

Youth Employment UK

Books and reports

CIPD. (2023) Youth employment and UK training: Guide for employers. Guide. London: Chartered Institute of Personnel and Development. (Member access only)

CIPD. (2024) Skills matching: Using and deploying people’s skills effectively in the workplace. Guide. London: Chartered Institute of Personnel and Development. (Member access only)

Department for Education. (2016) Report of the independent panel on technical education. London: The Stationery Office. 

Department for Education. (2024) Skills England report: driving growth and widening opportunities. London: The Department. 

Dromey, J. and McNeil, C. (2017) Skills 2030: Why the adult skills system is failing to build an economy that works for everyone. London: Institute for Public Policy Research. 

Foster, R. et al. (2018) Employer engagement and capacity to support T Level industry placements. Research report. London: Department for Education.

Journal articles

Crowley, L. (2019) How can businesses make the most of the skills in the UK workforce? CIPD Voice. Issue 17, 7 March.

Crowley, L. (2020) Urgent need to boost employer awareness of new technical qualifications. CIPD Voice. Issue 25, 21 September.

Donnelly, K. (2024) The workforce desperately needs upskilling – and Skills England has a once-in-a-generation opportunity. People Management (online). 17 October.

Lancaster, A. (2024) How L&D can create value: Focusing on skills development. CIPD Thought Leadership article. 4 November.

McGuinness, S. and Ortiz, L. (2016) Skill gaps in the workplace: measurement, determinants and impacts. Industrial Relations Journal. Vol 47 No 3, May. pp253-278.

O’Shea, B. (2024) Skills England can transform workforce development. People Management (online). 5 November.

CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.

Members and People Management subscribers can see articles on the People Management website.