New City & Guilds Employability Report reveals Growing Human Skills Shortage As Employers Turn To AI Recruitment Tools That Prioritise Technical Skills

• More than 1 in 3 employers say a lack of employability skills is holding back productivity – while 69% believe AI-powered applicant screening tools prioritise technical skills over these more human capabilities
• 51% of 18 to 24-year-olds worry that AI will reduce job opportunities for people their age
• Apprentices are the most likely of any group to feel completely confident in face-to-face communication skills

More than 1 in 3 employers (38%) say shortages in employability skills – the more human capabilities such as face-to-face communication, problem solving, and effective time management – are restricting productivity and business growth, according to a new report by skills development organisation City & Guilds (Counting the Cost: The UK’s Employability Skills Crisis). Yet AI-powered recruitment tools are failing to prioritise these skills when screening potential candidates.

The findings come at a moment of acute national concern about young people’s economic prospects. With more than one million young people in the UK currently NEET (not in employment, education, or training)[1], the research suggests the pipeline into work is not just depleted but deteriorating.

The employability skills gap is widening

The research, which surveyed 908 employers and 1,014 18-24 year olds, reveals that nearly two-thirds of UK businesses (64%) say candidates with these employability skills are becoming harder to find, and the consequences are already visible. Employers report operational errors and delays (37%), increased staff turnover and low morale (37%), lower efficiency (33%), and poor customer service (29%) as a direct result of the skills shortage.

AI is raising the stakes

The rise of AI is not relieving pressure on human skills, rather it is increasing it, as automation takes on more routine tasks. Nearly three-quarters of employers (74%) say employability skills are now more important than technical expertise for workplace success.

Yet AI-powered recruitment tools may be working against this. 43% of employers now use AI to screen or filter candidates, and more than two thirds (69%) believe these tools prioritise technical skills over the human capabilities businesses actually need. This means young people with strong employability skills risk being filtered out before a human ever sees their application.

Young people are facing a crisis of confidence

More than half (51%) of the 1,014 18 to 24-year-olds surveyed said they worry that AI will reduce job opportunities for people their age. Many are turning to AI to respond to that anxiety: 41% are already using it to improve their work and communication skills.

The problem may run deeper than skills alone. Only two in five young people (40%) feel completely confident in their face-to-face communication skills. Half (50%) of those surveyed say anxiety or mental health conditions have affected that confidence – more than any other factor cited, ahead of the pandemic (27%) or a lack of support at school (19%). Young people who are NEET are hit hardest: they are almost twice as likely as those in employment to lack confidence presenting themselves professionally (34% versus 17%), and more than a quarter (27%) say they simply do not know where to turn for support.

The contrast with those in structured vocational learning is stark. Apprentices are the most likely of any group to feel completely confident in face-to-face communication skills (48%), and three quarters (74%) have received dedicated employability skills training – more than any other segment.

Andy Moss, Interim Chief Executive Officer of City & Guilds, said:

“AI powered recruitment risks screening out the human skills employers say they need most. Employability skills – communication, problem solving and time management – matter just as much as technical know-how, if not more. Yet at the moment these skills are most in demand, we’re seeing a growing human skills shortage, that can be made worse by the tools meant to help.

“Our findings reinforce what employers have long recognised: apprenticeships and vocational training are highly effective routes to developing these skills, combining practical experience with the communication, problem-solving and teamwork capabilities that are critical for success in today’s workplace.”

Laura-Jane Rawlings MBE DL, Chief Executive Officer of Youth Employment UK, said:

“Too often, low confidence among young people who are not in education, employment or training is misunderstood as a lack of capability, when in reality it reflects a lack of opportunity, access and recognition.

Addressing this requires a shift from simply defining employability skills to actively enabling them. Employers, education providers and government must work together to ensure all young people have access to high-quality work experience, clearer pathways into work, and a shared language that helps them recognise and articulate the skills they are already developing in their lives”

City & Guilds’ report, Counting the Cost: The UK’s Employability Skills Crisis, recommends three key steps to close the UK’s employability skills gap:

• Employers should invest in employability skills through onboarding, early careers programmes and mentoring, rather than assuming young people arrive work-ready, and should review how AI-driven recruitment tools assess candidates.
• Policymakers should ensure skills and employment programmes give employers flexibility to invest in employability skills alongside technical training, including through the Youth Guarantee, the Growth and Skills Levy, the Jobs and Careers Service and TechFirst.
• Education and training providers should embed employability skills earlier, building young people’s confidence in areas such as face-to-face communication before they enter the workplace, to close the gap between what employers need and what new entrants bring.

[1] ONS, Young people not in education, employment or training (NEET), UK: May 2026

Read City & Guilds’ new report: Counting the cost: The UK’s Employability Skills Crisis here