The UK workforce is on the cusp of a talent crisis.
Even though the number of job vacancies in the UK fell by 1.2% between July and September 2025, behind this apparent decline lies another tension: a labour market where internal opportunities are shrinking, top talent is leaving, and confidence in leadership — particularly around AI strategy — is wavering.
This isn’t a caution; it’s a strategic gap. Organisations are struggling to define the skills they need and find the right talent, while also overlooking their best option: the people they already have. Much of this is related to how leaders communicate their AI vision and strategy. Indeed, leaders have a clear vision for what they plan to do with the productivity surplus, yet employees and job seekers alike are not on board with how AI is being deployed and feel unclear about what it means for their future.
Without clear communication about a company’s AI strategy and its impact on roles and team structures, employee trust is suffering. These aren’t isolated challenges. They’re symptoms of a broader breakdown in trust and alignment. If left unaddressed, they will limit an organisation’s ability to retain talent, adapt to change, and sustain performance.
Unearthing the skills of your workforce
The UK is at an inflection point. AI has huge potential to improve productivity, unlock growth and reshape how we work. But if we don’t invest in the skills to support it, we’ll fall behind.
Our UK data shows that 78% of businesses now require AI-related skills for entry-level positions, a clear indication that the demand for digital skills is accelerating at every level of the workforce, and the digital skills gap is set to grow even wider unless addressed. There is a concerning disconnect, however, as employee sentiment on their organisation’s use of AI is negative. So bridging this gap is essential for building a workforce ready to collaborate with AI.
The way forward is clear: adopting skills-based workforce planning, underpinned by responsible AI, offers businesses significant advantages. This approach enables employers to better leverage their existing talent, creating a workforce that is more flexible, transparent, and connected.
By making skills visible, matching employees to appropriate projects and roles in real time, and establishing clear internal career pathways, organisations can accelerate hiring, improve retention, and realise tangible productivity improvements from AI. Our analysis suggests this could unlock as much as £119 billion in extra productive capacity each year for large UK businesses.
However, the UK’s lack of investment in skills development has created a significant gap in the workforce. The expanding digital skills shortage is costing the economy £63 billion annually, highlighting the urgent need for improved skills management. This figure is more than just a statistic – it’s a clear warning that action is needed soon.
Ensuring that skills are visible and can be put into practice is crucial for organisational progress, and AI can play a vital role in making this happen. Some workers are understandably cautious. They worry that AI could make their roles obsolete. That’s why inclusive leadership matters more than ever. If we want people to engage in reskilling, they need to feel supported, not replaced.
By giving leaders a clear picture of their workforce’s capabilities, they can take a more strategic approach to employee development and scale up skills more rapidly. Already, over half of companies are beginning this transition, demonstrating that skills are fast becoming the key asset in today’s workforce.
Managing multi-generational workforces
To use AI for lasting, positive impact, workforce leaders must rethink how jobs are structured, how skills are developed internally, and how talent strategies adapt to shifting demands.
The main challenge is that the workforce isn’t one-size-fits-all. Each generation brings something essential to the table. 60% of millennial leaders are concerned about the skills shortage in the next three years, and are leading the charge on upskilling their workforce. Yet baby boomers have deep experience and strategic know-how, and Gen Z is pushing for faster change and quicker technology. These very different perspectives create an incredible melting pot, and when these perspectives align, teams move quickly and build a workplace culture of resilience that is ready for anything.
However, the current disconnect has consequences. When employees can’t see how AI fits into their role or their future, confidence drops. Engagement weakens. Change slows. These aren’t abstract risks but a measurable drag on transformation. It is vital that leaders take a human-centric approach to AI adoption.
AI adoption is a cultural shift, not just a technical one. Don’t simply deploy new tools and expect people to use them. Instead, create a feedback loop: start with a clear vision, provide robust programs, and then listen to employees and address their AI barriers in real time. This helps them see AI as a pathway to personal growth, not as a threat.
Building human-centred, tech-enabled workplaces for the future
Recent investments in AI infrastructure position the UK economy to lead in the era of AI. The real transformation will be defined by how effectively organisations balance technological advancement with a human-centered approach. People need to feel supported, not replaced. AI should serve as a collaborator, freeing employees from repetitive tasks and enabling them to focus on strategic, high-value work that will empower employees.
The truth is, AI isn’t a replacement for human ingenuity — it’s a multiplier. It amplifies our ability to solve problems, innovate, and adapt. But only if we approach it with the right mindset. That means fostering a culture of curiosity, where all employees feel empowered to experiment with AI and see it as a tool to enhance their work, not a threat to it.
That message needs to be relayed from the top. Leaders of all generations must be clear: reskilling is not optional. It’s a business priority.