The UK workforce is facing its most significant transformation since the Industrial Revolution. New research from the National Foundation for Educational Research (NFER) reveals a stark reality: unless organisations act decisively, seven million workers will lack the essential skills needed to thrive in an AI-dominated economy by 2035. This isn’t merely a workforce planning challenge—it’s a strategic inflection point that will determine which organisations lead and which become casualties of technological disruption.
The Real Story Behind the Numbers
The NFER’s Skills Imperative 2035 research programme, funded by the Nuffield Foundation, represents one of the most comprehensive analyses of future workforce requirements ever conducted in the UK. The findings challenge comfortable assumptions about how technology will reshape employment.
Strategic Reality: The 3.7 million workers currently lacking essential employment skills will nearly double to seven million by 2035 without intervention—representing roughly 20% of the entire workforce.
The scale of disruption is unprecedented. Twelve million people in England currently work in declining occupations—administrators, sales staff, and elementary roles that are being hollowed out by automation and AI at three times the rate previously projected.
Critical Numbers at a Glance
| Metric | Current State | 2035 Projection |
|---|---|---|
| Workers with EES deficiencies | 3.7 million | 7 million |
| Jobs in declining occupations | 12 million | 9-11 million |
| Potential job losses | — | 1-3 million |
| Employment decline rate (2021-24) | 2.7% actual | 0.8% projected |
Critical Context: Employment in declining occupations is falling 2.7% versus the 0.8% originally projected—meaning disruption is arriving three times faster than anticipated.
What’s Really Happening in the Labour Market
The transformation isn’t simply about jobs disappearing—it’s about the fundamental reshaping of work itself. The NFER identifies a phenomenon called “occupational upgrading”: growth is concentrated at the top of the jobs ladder whilst the middle and bottom are eroding.
The Six Essential Employment Skills
The research identifies six capabilities that will distinguish successful workers from those displaced by technology:
- Communication — Expressing ideas clearly and interpreting meaning accurately across digital and cross-cultural settings
- Collaboration — Building enduring relationships and weaving diverse perspectives into shared success
- Information Literacy — Evaluating evidence, testing arguments, and judging credibility in a data-saturated world
- Organising, Planning and Prioritising — Converting intention into action whilst balancing competing demands
- Problem Solving and Decision Making — Diagnosing challenges and selecting courses of action under uncertainty
- Creative Thinking — Generating fresh ideas and applying them in ways that create value
Implementation Note: These aren’t soft skills to be addressed as an afterthought—they’re the core competencies that will complement AI and automation rather than compete with it.
Success Factors for Workforce Transition
The research reveals that workers displaced from declining occupations face significant barriers to transitioning into growth sectors. Most lack both the formal qualifications and the essential employment skills required for expanding professional and technical roles.
| Transition Factor | Challenge Level | Mitigation Strategy |
|---|---|---|
| Qualification gaps | High | Reskilling pathways with recognised credentials |
| EES deficiencies | High | Embedded skills development in workplace |
| Career progression | Medium | Skills-based hiring practices |
| Access to training | High | Reinvigorated adult skills system |
Reality Check: Young workers now start further down the career ladder than previous generations and progress more slowly—even graduates face rising unemployment and reduced access to professional roles.
The Human Factor: Why This Matters for Organisations
The strategic implications extend far beyond HR planning. Organisations that fail to address skills gaps will face:
- Constrained growth — Inability to fill higher-skilled positions limits operational capacity and innovation
- Productivity drag — Workers lacking essential skills create bottlenecks across collaborative workflows
- Talent competition — Organisations offering development pathways will attract the strongest candidates
- Regulatory exposure — Skills shortages in critical functions may trigger compliance vulnerabilities
SME Advantage: Smaller organisations can often implement skills development programmes more rapidly than large enterprises, creating competitive differentiation in talent markets.
Stakeholder Impact Analysis
| Stakeholder Group | Primary Impact | Strategic Response |
|---|---|---|
| Leadership teams | Growth constraints, talent shortages | Workforce planning integration with AI strategy |
| HR/L&D functions | Reskilling demand surge | Skills-based hiring and development frameworks |
| Line managers | Team capability gaps | EES assessment and development tools |
| Individual workers | Career uncertainty | Proactive skills development |
| Education providers | Curriculum relevance | Employer collaboration on EES integration |
Strategic Recommendations for Workforce Transformation
The NFER research points toward a comprehensive response spanning organisational, sectoral, and policy dimensions. For business leaders, four priority areas emerge:
Priority 1: Assess Current Skills Reality
Before investing in development programmes, organisations need accurate visibility into existing capabilities. The research reveals that employees often believe they have more skills than their employers recognise—particularly at lower-skilled levels.
Take Action: Implement structured skills assessments using common frameworks that enable accurate gap analysis and identify high-potential individuals for transition support.
Priority 2: Adopt Skills-Based Hiring
Traditional qualification-focused recruitment excludes workers who may have developed essential skills through non-traditional routes. Skills-based hiring broadens talent pools and accelerates workforce adaptation.
Implementation priorities by organisational maturity:
| Maturity Level | Immediate Actions |
|---|---|
| Early stage | Define EES requirements for key roles using common framework language |
| Developing | Integrate skills assessments into recruitment processes |
| Advanced | Build internal mobility pathways based on transferable skills |
Priority 3: Embed EES Development in Operations
Essential employment skills cannot be developed through classroom training alone—they require deliberate practice in workplace contexts.
Success Factor: Organisations achieving strongest skills development outcomes integrate EES cultivation into operational processes rather than treating it as a separate training function.
Priority 4: Invest in Management Capability
Line managers play the critical role in assessing, utilising, and developing worker skills. Yet many lack the tools and training to perform this function effectively.
Warning: ⚠️ Without management capability investment, even well-designed skills development programmes will fail to deliver intended outcomes.
Hidden Challenges in Workforce Transformation
The NFER research surfaces several non-obvious barriers that organisations must address:
Challenge 1: The Credential Trap
Workers in declining occupations often lack formal qualifications that would signal capability to potential employers in growth sectors—even when they possess relevant skills. Breaking this cycle requires both skills recognition mechanisms and employer willingness to look beyond credentials.
Mitigation: Adopt skills-based hiring practices that evaluate demonstrated capabilities rather than relying solely on qualifications.
Challenge 2: The Training Investment Gap
Public and private investment in adult learning has fallen sharply since 2010, precisely when the need for workforce reskilling has intensified. Organisations cannot rely on the external education system to prepare workers for transition.
Mitigation: Develop internal reskilling pathways and partner with education providers to create targeted programmes.
Challenge 3: The Speed Mismatch
Technological change is accelerating whilst the education system responds slowly. Young people entering the workforce may already be equipped with outdated skills.
Mitigation: Establish continuous learning cultures that adapt to emerging skill requirements rather than point-in-time training interventions.
Challenge 4: The Inequality Amplifier
Without deliberate intervention, workforce transformation will widen existing divides—between high-skill and low-skill workers, between regions with strong and weak growth sectors, and across socioeconomic backgrounds.
Mitigation: Design skills development programmes with explicit equity considerations, targeting support toward workers facing the greatest transition barriers.
Core Value Proposition: Investing in Essential Skills
The research makes clear that essential employment skills represent the highest-value investment for workforce resilience. Unlike narrow technical competencies that may become obsolete, EES capabilities remain relevant across technological cycles because they complement rather than compete with AI and automation.
Strategic Insight: Organisations that build strong EES foundations will weather technological disruption more effectively whilst capturing opportunities that less-prepared competitors cannot pursue.
Three Success Factors for Skills Transformation
- Executive commitment — Workforce skills must be treated as a strategic asset, not an operational cost
- Measurement discipline — Track EES development with the same rigour applied to financial metrics
- Long-term perspective — Skills investment returns compound over time; short-term thinking produces short-term results
Next Steps for Leaders
- Audit current workforce EES capabilities using structured assessment frameworks
- Map critical roles to specific EES requirements using common framework language
- Identify workers in declining function areas who show high potential for transition
- Evaluate management capability to assess and develop worker skills
- Develop business case for skills investment that quantifies growth constraints from capability gaps
- Explore partnerships with education providers for tailored reskilling programmes
Source and Attribution
This analysis draws on findings from The Skills Imperative 2035: Creating a System of Lifelong Learning to Provide the Essential Skills for Tomorrow’s Workforce, authored by Luke Bocock, Michael Scott and Jude Hillary at the National Foundation for Educational Research (NFER), published November 2025. The research was funded by the Nuffield Foundation.
📥 Download Resource: Access the full NFER report at nfer.ac.uk
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