Employers and Gen Z have a shared opportunity to shape Scotland’s future

A new report from The Open University reveals a growing disconnect between UK employers in Scotland and the next generation of workers - one that could be preventing employers from addressing the nation’s persistent skills shortages.

The ‘Business Barometer: Skills for today and tomorrow: how employers can plan for future skills’, based on a survey of over 2,000 UK organisation leaders and 1,000 Gen Z adults, finds that more than half (56%) of Scottish organisations are currently experiencing a skills shortage and only a third (35%) have specific initiatives in place to recruit, retain or train under-25s.

At the same time, the majority of Gen Z respondents are aware of Scotland’s skills challenges and are factoring that into their career thinking - but they may not be receiving the guidance or support they need to become truly work-ready:

• 72% are considering careers based on where skills are most needed in the UK.
• 71% would stay longer with an employer that offers training and development.
• 66% have never been told they lack specific skills — despite 34% of employers perceiving a lack of “work readiness” as one of the top barriers to filling roles.

This gap in expectations is particularly stark at a time when digital, AI and sustainability skills are increasingly essential. While nearly half of Gen Z based in Scotland (47%) are already working in or interested in AI, 20% of Scottish employers say they’re not confident they can deliver their AI strategies due to talent constraints.

Baroness Martha Lane Fox CBE, Chancellor at The Open University commented:

“Employers have an incredible opportunity - and responsibility - to shape the future workforce. The talent is out there. Young people are motivated, they’re digitally savvy, and they want to contribute. But they need clear training pathways, practical support, and employers willing to invest.

“While there are economic challenges at this moment for employers, the smartest organisations won’t just wait for skills to arrive - they’ll build them, inclusively and proactively, to fuel growth and resilience.”

We need to meet learners where they are, equip them for the future, and make development a shared priority. The organisations that do, will be the ones shaping Scotland’s growth and resilience for years to come.”
David Allen, OU in Scotland

While global headlines have amplified political division over ED&I policies, the report reveals continued support for inclusion in Scotland. The data shows that 87% of employers say ED&I is important to their organisation, while 56% believe it will become even more important over the next five years.

However, 24% have no initiatives in place for underrepresented or disadvantaged groups, including returners, career changers, and workers with disabilities or neurodiversities.

This presents a missed opportunity to widen the talent pipeline and reduce economic inactivity - particularly in sectors and areas facing acute workforce shortages.

David Allen, Senior Partnerships Manager at The Open University in Scotland, added:

“Scotland’s skills gap is one of the biggest long-term challenges facing our economy - but it’s also one of our greatest opportunities. With 56% of employers who offer apprenticeships are set to hire or train more apprentices and 51% recognising they have a responsibility to fund staff training, there is real momentum building."

"However, with a third of employers citing funding as a barrier and many still without a formal skills plan, action is urgently needed. Flexible, inclusive training delivered in partnership with tertiary education providers can help employers retain talent, address skills shortages before they escalate and help support long term succession planning within the business. 

"We need to meet learners where they are, equip them for the future, and make development a shared priority. The organisations that do, will be the ones shaping Scotland’s growth and resilience for years to come.”

The Business Barometer has tracked the skills shortage for nearly a decade and while the proportion of employers facing a skills shortage has stabilised since last year, the issue remains widespread across sectors and regions. The skills gap remains one of the most pressing issues for organisations, with nearly two in five (39%) with a skills shortage expecting it to worsen over the next five years. Among those currently affected, Scottish organisations report:

• Recruitment and training in Scotland has become more difficult due to the increase in national insurance (58%), increase in the minimum wage (51%) and economic uncertainty (70%).
• 44% with a skills shortage report increased workload on other staff.
• 39% cite reduced productivity.
• 35% say they’ve scaled back growth or expansion plans.
• 23% lack confidence in delivering their AI plans over the next five years.

Despite this, 50% of Scottish employers have a formal skills plan in place and even though the data shows training boosts retention, 23% of organisations say a barrier to training staff is the fear they’ll leave.

To find out more about how employers can address the organisation skills shortage on the Business Barometer website.

24 June 2025