Employers in the UK are urging the government to prioritise workforce skills and productivity in its forthcoming 10-year industrial strategy, Invest 2035.
According to a survey by the Recruitment and Employment Confederation (REC), there is widespread demand for policies that address skills gaps economic growth.
Invest 2035, currently in consultation, is set to be finalised in spring 2025. The REC’s survey, conducted by Whitestone Insight in November 2024, gathered responses from 233 employers across the UK.
Skills Development: A Priority for Employers
The survey found that 57 percent of employers identified upskilling the current workforce as the top priority – a view which remained consistent across regions and business sizes. Expanding vocational training routes was a priority for 41 percent of employers, while 40 percent cited digital training ad skills development, with a particularly strong support in London and the South among larger employers.
A further 36 percent said that innovation and entrepreneurship as crucial, with 60 percent of London-based respondents remarking on the need for a more open attitude to risk and reduced reliance on government backing.
STEM education and training were prioritised by 30 percent of respondents, with support highest in London (42 percent) and among larger employers (40 percent). Meanwhile, 20 percent of employers stressed the importance of attracting international talent.
Neil Carberry, REC Chief Executive, said, “If the new industrial strategy’s focus on people is just a list of skills programmes that government will fund, then it will fail. Skills are part of a complex web of workforce practices that – if we can get things right – have the potential to transform UK productivity. But that requires serious engagement from business and public authorities alike. This issue was very much a ghost at the feast in the May-era industrial strategy.”
Challenges in Recruitment
Employers also shared their perspectives on recruitment challenges. Skills shortages are considered the biggest issue by 60 percent of respondents, with the Midlands (69%) expressing the most concern. The unstable business tax environment was a concern for 41 percent of employers, particularly in London (53%).
Small businesses and start-ups face particular difficulties, with 36 percent of respondents pointing to insufficient support for SMEs – noting compliance with complex regulations as a key barrier. Access to global talent is a concern for 25 percent of respondents, with marked differences among areas; it concerns London employers (44%) are far more than those in the Midlands (18%).
Neil Carbery said, “As our survey shows, there is a lot to do. But there is also a big prize. At a time when our domestic labour force is shrinking and skills needs are changing fast, we could unlock £39bn of growth every year by getting the people stuff right. That is why our latest survey which finds six out of ten employers are concerned about shortages in the job market, despite lower hiring activity this year.
“Unlocking the productivity and growth of an engaged workforce is growth the government can’t afford to lose – and that includes embracing the fact that people want to work in different ways.”
Focus on Growth
The government’s industrial strategy aims to tackle regional disparities by addressing barriers such as skills shortages, infrastructure gaps, and taxation issues. Employers across the UK are eager to see tangible progress, particularly in areas where the impact on growth could be most significant.
“The survey shows that industrial strategies need to consider people and productivity alongside taxation and infrastructure policies,” Carbery adds.
“Governments must work together on a more business-responsive approach to skills and deliver on the new Growth and Skills Levy so that employers can use funding more flexibly. There are many vacancies that require shorter learning curves and that can be filled quickly by someone who is ready to learn if they have the right support. A stable, long-term approach will help businesses step up with confidence, ensuring public money crowds in private sector commitment.”
