Employers turn to upskilling as hiring pressures grow

Almost half of UK employers have increased efforts to develop talent internally over the past year as skills shortages, weaker recruitment, and forthcoming employment-law changes reshape workforce planning.

Research from the CIPD and Omni RMS found that 48% of employers had stepped up in-house talent development. Among organisations introducing measures to improve retention, 45% increased learning and development opportunities.

The Resourcing and Talent Planning report surveyed just over 1,000 UK employers with HR decision-making responsibilities. Its findings point to an increasingly complicated recruitment market in which organisations are receiving more applications while continuing to struggle to secure the capabilities they need.

Fifty-eight per cent of employers reported an increase in unsuitable candidates applying for jobs over the past year. At the same time, 53% of organisations that attempted to recruit experienced difficulties attracting candidates, particularly for senior and skilled positions.

Retention remains another constraint. Forty-four per cent said talent had become harder to retain, increasing the incentive to develop existing employees rather than rely entirely on external recruitment when a capability gap appears.

Ninety-one per cent of employers are already using upskilling to address skills gaps or are considering it for the future. The figure suggests internal development is becoming part of core workforce planning as organisations balance recruitment costs, capability shortages, and uncertainty over future demand.

The findings add a workforce-strategy dimension to the weak hiring and vacancy data already evident across the UK labour market. Falling vacancies do not mean skills shortages have disappeared: employers can receive more applicants while still finding too few with the experience or technical capability required.

Claire McCartney, senior policy advisor at the CIPD, said: “The findings of our report suggest that in order to be future-ready and retain skilled employees, organisations should prioritise strategic workforce planning and in-house development programmes to upskill existing employees in priority areas.”

The report also finds that the Employment Rights Act 2025 is influencing expectations about labour costs. Fifty-four per cent of employers believe the measures will increase their employment costs, comprising 14% expecting an increase to a large extent and 40% expecting some increase.

A quarter of respondents, 26%, expect to recruit fewer workers because of anticipated employment costs linked to the legislation. A further 20% said they were less likely to hire workers who need additional support.

Those responses sit alongside broader pressures rather than operating in isolation. Employers are managing a slower jobs market, technological change, recruitment budgets, skills shortages, and new statutory requirements at the same time. Internal development can offer an alternative where an organisation already has employees who understand its systems, customers, and working practices.

Louise Shaw, CEO at Omni RMS, said: “The findings highlight a clear challenge for employers. While talent is increasingly recognised as a strategic priority, many organisations are still making workforce decisions reactively.”

She added that the increasing volume of applications did not remove the need for rigorous assessment of capability. Employers facing tighter hiring budgets have less room to absorb poor recruitment decisions, particularly where roles require scarce technical or leadership skills.

Entry routes into employment remain part of the response. Fifty-two per cent of surveyed employers offer apprenticeships, while 43% provide graduate programmes. One fifth expect to increase recruitment of workers aged 18 to 24 during the next year.

Among employers planning greater recruitment of younger workers, 40% cited the need to secure a future talent pipeline, while the same proportion identified access to key digital skills. Those findings suggest early-career hiring remains strategically important even where overall recruitment is becoming more cautious.

The labour-market backdrop is defensive. Twenty-seven per cent of employers reported redundancies during the past year, an increase of 10 percentage points compared with 2024. More organisations reduced recruitment of permanent employees, at 28%, than increased it, at 22%.

Workforce planning is consequently becoming less about adding headcount and more about deciding where capability should come from. Employers must weigh external recruitment against reskilling, succession, apprenticeships, technology investment, and changes to job design.

McCartney also urged organisations to preserve routes into work for new and returning employees through apprenticeships, traineeships, industry placements, and post-A-level pathways. The report points towards a mixed workforce model in which internal development takes a larger role without removing the need to bring new skills and people into organisations.