Skills gap has ‘passed its peak’ but experts warn of a ‘hiring recession’
The number of firms reporting difficulties finding talent fell for the first time in ten years, a new survey showed, suggesting the UK skills gap may have “passed its peak”.
ManpowerGroup’s latest talent shortage survey showed that 76 per cent of firms reported a skills shortage entering 2025, down from 80 per cent last year.
This was the first time since 2014 that the number of firms suffering from a scarcity of well-qualified candidates declined, bringing the UK back towards the global average of 74 per cent.
IT & data skills were the most sought after skills for businesses, followed by operations & logistics and engineering.
The report suggests that reskilling current employees (28 per cent) has been the most popular option for firms seeking to address the skills gap.
23 per cent were targeting new talent pools while 21 per cent were offering higher wages despite the macroeconomic challenges.
Michael Stull, UK managing director of the recruitment company, warned that the improvement in the skills shortage might just reflect a more subdued hiring market.
“Although any movement towards closing the skills gap is positive, we must bear in mind that many other indicators point to a hiring recession,” he said.
“There are fewer jobs out there and this is playing a role in slowing the demand for skills.”
Business groups have been calling for action on the skills shortage for years, warning that it could slow progress in a number of crucial areas of economic importance, like green energy.
Darren Davidson, the UK boss of Siemens Energy, warned on Monday that a shortage of workers was “one of the challenges Britain needs to get right” as the energy transition picks up pace.
Davidson estimated that about 500,000 more workers will be needed for energy jobs over the coming years.
The government established a new body, Skills England, which aims to bring together businesses, training providers and unions with local authorities across the country.
However, reports suggest that the body will not have the required heft or independence to drive a coordinated skills strategy across multiple different sectors.