Mind the Gap: Employers and Gen Z Out of Sync on Skills

Welsh employers still face critical skills shortages – but new report from The Open University reveals young people are ready to learn and want to contribute.

A new report from The Open University reveals a growing disconnect between Welsh employers and the next generation of workers — one that could be preventing employers from addressing the country’s persistent skills shortages.

The ‘Business Barometer: Skills for today and tomorrow: how employers can plan for future skills’, is a survey of over 2,000 UK organisation leaders and 1,000 Gen Z adults.

In Wales, 139 organisation leaders and 80 Gen Z adults (under the age of 25) were surveyed and reported that more than half (58%) of organisations are currently experiencing a skills shortage, the highest of all UK nations. At the same time, only a third (31%) of those Welsh organisations have specific initiatives in place to recruit, retain or train under-25s.

Over half (54%) of Gen Z respondents in Wales are aware of the country’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:

• 73% are considering careers based on where skills are most needed
• 66% would stay longer with an employer that offers training and development

This gap in expectations is particularly stark at a time when digital, AI and sustainability skills are increasingly essential. While over half of Gen Z (58%) are already working in or interested in AI, 20% of Welsh employers say they’re not confident they can deliver their AI strategies due to talent constraints.

'The data is clear: there’s a mismatch between employer intentions and practical action.' said Dr Scott McKenzie, Assistant Director, Learning, Skills and Innovation. 'But there’s also a real opportunity here. Welsh employers can start by building structured skills plans, work with education providers invest in flexible training, and opening up opportunities to more diverse talent. The organisations who act now — who take learning seriously, at every level — will be the ones who will thrive in the years ahead.'

'Employers have an incredible opportunity — and responsibility — to shape the future workforce, added Baroness Martha Lane Fox CBE, Chancellor at The Open University. '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.'

While global headlines have amplified political division over ED&I policies, the report reveals continued support for inclusion in the UK. The data shows that 80% of employers in Wales say ED&I is important to their organisation while 42% believe it will become even more important over the next five years.

However, 25% 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.

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 in Wales, with nearly a third (38%) expecting it to worsen over the next five years. Among those currently affected, Welsh organisations report:

• Recruitment and training is more difficult due to the increase in national insurance (54%), increase in the minimum wage (56%) and economic uncertainty (72%)
• 60% report increased workload on other staff
• 43% cite reduced productivity
• 37% say they’ve scaled back growth or expansion plans
• 20% lack confidence in delivering their AI plans over the next five years

Despite this, fewer than half of Welsh employers (36%) have a formal skills plan in place and even though the data shows training boosts retention, 30% of organisations say they hesitate to train staff for fear they’ll leave.

Find out more about how employers can address the organisation skills shortage.