Counting the Cost: Why the UK’s Employability Skills Crisis Can No Longer Be Ignored

For years, employers have been telling us that something fundamental is missing in the labour market. Not technical skills, although those matter enormously, but the human capabilities that allow people to thrive in real workplaces: communicating clearly, managing time, solving problems, working with others. These are the skills that make organisations function. And yet, as our new report Counting the Cost: The UK’s Employability Skills Crisis shows, they are becoming harder to find at the very moment the economy needs them most.

This isn’t simply another “skills gap story”. It is a warning about a structural weakness in the UK’s talent pipeline, one that is already costing employers time, money and productivity, and one that risks locking a generation of young people out of opportunity.

Why publish this research now? Because the system is flashing red.

Having spent much of this year talking to employers, training providers and policymakers, I’m increasingly convinced that employability skills have moved from being an important workforce issue to an urgent economic one. At the AELP National Conference in June, I heard repeated concerns about young people’s readiness for work, not in terms of technical ability, but in their confidence, communication skills and understanding of workplace expectations. What struck me was how consistent the message was across sectors. Whether the discussion was about construction, health and social care, manufacturing or professional services, employers were describing many of the same challenges.

Those conversations reinforced what we were already hearing through City & Guilds’ wider engagement with employers and providers. There is a growing sense that too many young people are leaving education without enough opportunities to develop and practise the human skills that underpin success at work. That is one of the reasons this research felt so timely and necessary.

We chose to conduct this research in early 2026 because the signals were becoming impossible to ignore. NEET levels had climbed past one million young people. Employers were reporting rising operational errors, delays and customer service issues linked directly to human skills shortages. And AI, far from easing pressure, was accelerating the problem.

A widening confidence gap that is shaping young people’s ability to enter and progress in work.

Our survey of 908 employers and 1,014 young people revealed something deeper than the headlines: a widening confidence gap that is shaping young people’s ability to enter and progress in work. Only 40% of young people told us they feel completely confident in face to face communication, and among those who are NEET, confidence in presenting themselves professionally drops to 17%. More than a quarter of NEET young people say they simply do not know where to turn for support.

These are not statistics about capability. They are statistics about access, anxiety and the absence of structured pathways.

What the press release didn’t say

Much of the media coverage has focused on the headline figure: 64% of employers say human capabilities are becoming harder to find.

But several findings deserve more attention:

• AI is quietly reshaping early careers recruitment. Nearly three quarters of employers (74%) say employability skills now matter more than technical expertise, yet 69% believe AI powered screening tools prioritise technical skills instead. In other words, the very tools designed to widen access may be filtering out the candidates employers actually need.
• Apprenticeship pathways are outperforming every other route. Apprentices are the most confident group in face to face communication (48%), and 74% report receiving dedicated employability skills training. This is a striking contrast with young people outside structured vocational learning, and a reminder that apprenticeships remain one of the UK’s strongest engines for human skills development.
• Mental health is now the single biggest factor affecting young people’s confidence. Half of young people (50%) say anxiety or mental health conditions have affected their ability to communicate confidently. This is not a marginal issue; it is central to employability.
  These insights matter because they point to a system challenge that cannot be solved by technical training alone.

Where this fits in the UK skills agenda

The UK is in the middle of a major policy reset. The Youth Guarantee, the Growth and Skills Levy, the Jobs and Careers Service and TechFirst all signal a shift towards more coherent pathways into work and training. But our findings suggest that unless employability skills are embedded deliberately, not assumed, these initiatives will struggle to deliver the outcomes government intends.

Three implications stand out:

AI driven recruitment needs urgent review.

If AI tools are filtering out candidates with strong human skills, government and employers must work together to ensure recruitment technology supports inclusion rather than undermining it. This is especially important for NEET young people, who are already at risk of being overlooked.

Employability skills are an economic growth priority.

When more than one in three employers say human skills shortages are holding back productivity, this is not a “nice to have” issue. It is a drag on growth. Embedding employability skills within funded programmes, from pre employment training to apprenticeships, is essential.

Confidence building must start earlier.

Schools, colleges and training providers need support to embed communication, teamwork and problem solving well before young people reach the labour market. The data shows that structured vocational learning works, but too few young people are accessing it.

A crisis we can solve if we act together

The employability crisis is not inevitable. It is the result of choices and systems that can be changed. If we rebuild the first rung of the ladder, with clearer pathways and a renewed focus on human skills, we can ensure every young person, and every adult needing to retrain, has a fair chance to build a future.

From my own conversations with employers and training providers, I remain optimistic. There is widespread recognition of the problem, but also a genuine willingness to act. What employers consistently tell me is that they can teach many technical skills on the job. What they need are people who can communicate, collaborate, adapt and grow. If we can create more opportunities for young people to develop those capabilities, we will not only improve individual life chances, we will strengthen the resilience and productivity of the UK economy as a whole.

By Luke Maynard, Head of Communications and Corporate Affairs at City & Guilds