Upskilling employees is becoming a central workforce strategy for UK organisations as employers respond to recruitment difficulties, skills shortages and rising employment costs.
In Brief
Upskilling employees is becoming a more important workforce strategy as UK employers respond to persistent skills gaps, unsuitable job applications, retention pressures and rising employment costs. CIPD research found that 91% of organisations are already upskilling employees or considering doing so, while 48% increased their efforts to develop talent internally during the past year.
Key Points
- 91% of employers are already investing in upskilling or are considering doing so in future.
- 48% increased their efforts to develop talent internally over the previous year.
- 53% of organisations that attempted to recruit experienced difficulties attracting candidates, although this has fallen from 64% in 2024 and 77% in 2022 as the labour market has softened.
- 58% reported an increase in unsuitable applications, compared with 33% seeing an increase in suitable candidates.
- Most employers expect the Employment Rights Act 2025 to increase employment costs, including 14% to a large extent, 40% to some extent and 20% to a small extent, while 26% anticipate recruiting fewer workers.
- Employers are also strengthening future talent pipelines, with 52% offering apprenticeships, 43% graduate programmes and 20% planning to recruit more 18–24-year-olds.
The CIPD’s Resourcing and Talent Planning Report 2026, produced with Omni RMS, surveyed 1,014 UK employers with responsibility for HR decision-making. It found that 91% are already upskilling employees or considering doing so in future, while 48% increased their efforts to develop talent in-house over the previous year.
The shift comes against a cooler labour market in which vacancy numbers are falling but employers continue to report difficulty finding the skills they need.
Recruitment Problems Are Driving Upskilling Employees
The apparent contradiction in the labour market is important. Employers are receiving more applications, but that has not necessarily made recruitment easier.
Among organisations that attempted to recruit, 53% experienced difficulties attracting candidates, particularly for senior and skilled roles. Fifty-eight per cent reported an increase in unsuitable applications over the previous year, compared with only 33% reporting more suitable candidates.
Competition for well-qualified talent also remains strong: 52% said it had increased, while 44% reported that talent had become harder to retain.
Those difficulties have nevertheless eased compared with previous surveys. The proportion reporting problems attracting candidates has fallen from 77% in 2022 and 64% in 2024 to 53% in 2026, while the proportion finding talent harder to retain has fallen from 56% in 2024 to 44%. The CIPD attributes that improvement to lower vacancy levels and a softer labour market. The remaining challenge is increasingly one of quality rather than volume.
The CIPD notes, however, that the 2026 survey sample was restricted to respondents with responsibility for resourcing and talent planning, so comparisons with earlier surveys should be treated with some caution.
These findings sit alongside a broader slowdown in recruitment. More organisations reduced permanent hiring over the previous year than increased it, at 28% compared with 22%, while 27% reported redundancies, up from 17% in 2024. Official figures also show UK vacancies falling to around 702,000 in June to August 2026, their lowest level since early 2021.
For many organisations, upskilling employees therefore offers a way to fill capability gaps without relying entirely on external recruitment to meet their skills needs.
Internal Development Moves Up the Agenda
The CIPD found that 48% of employers had increased their efforts to develop talent internally over the previous year. Upskilling employees was also the most common response to recruitment difficulties and tighter UK migration rules.
Learning and development is being used as a retention tool as well. Among organisations that had introduced specific retention initiatives, 45% increased learning and development opportunities, making it the most common measure reported. Coaching, mentoring and buddy systems were used by 26% of this group.
The attraction is straightforward. Developing an existing employee can retain organisational knowledge, create clearer career progression and reduce dependence on external hiring for hard-to-fill roles. It can also allow employers to develop skills specific to their own technology, customers and operating model.
However, upskilling employees should not simply mean sending staff on more courses. The CIPD encourages employers to treat internal capability and mobility as part of their wider resourcing strategy, identifying critical skills and then deciding whether they should be developed, redeployed or recruited.
Employment Rights Act Costs Are Affecting Hiring Decisions
The Employment Rights Act 2025 is also influencing workforce planning.
When surveyed, most employers expected measures in the Employment Rights Act 2025 to increase employment costs. Fourteen per cent anticipated an increase to a large extent, 40% to some extent and 20% to a small extent. Twenty-six per cent expected to recruit fewer workers in response, while 20% said they would be less likely to hire workers who may need additional support, including people with long-term health conditions, carers and inexperienced workers.
That final figure deserves particular caution. Cost pressures do not alter employers’ obligations under equality law. Recruitment criteria must remain non-discriminatory, and employers must make reasonable adjustments for disabled applicants where required.
For employers looking to control recruitment costs, upskilling employees may therefore be a legitimate alternative to increasing headcount, but decisions about who to recruit must still be based on lawful and objective criteria.
Building Future Talent Through Apprenticeships and Graduate Routes
Internal development does not mean closing the door to new entrants.
Just over half of organisations surveyed, 52%, offer apprenticeships and 43% run graduate programmes. Twenty-seven per cent offer mid-career change programmes, up from 21% in 2021.
A fifth of employers plan to increase recruitment of 18 to 24-year-olds during the next year. Among those organisations, the two most commonly cited reasons were securing a future talent pipeline and gaining access to key digital skills, both at 40%.
This matters because a sustainable skills strategy cannot depend only on upskilling employees already in the organisation. Employers also need entry routes that allow them to build future capability and replace skills lost through turnover, retirement or technological change.
The CIPD consequently recommends aligning apprenticeships, early-career programmes and mid-career pathways with future skills demand rather than operating them as standalone initiatives.
Technology Is Changing the Shape of the Workforce
The report also shows that employers are not responding to skills shortages through training alone.
Twenty-nine per cent said they had replaced some jobs with technology and automation during the previous year. AI use in recruitment remains relatively limited, but is increasing in areas such as writing job descriptions and screening candidates.
Skills England’s 2026 Annual Skills Report provides a wider context. It says more than a quarter of vacancies are difficult to fill because of skills shortages and identifies substantial gaps in priority sectors, with particularly strong future demand for digital and engineering occupations.
Upskilling employees is therefore taking place alongside automation rather than instead of it. As technology changes jobs, employers will increasingly need to identify which capabilities should be automated, which need to be developed internally and where external recruitment remains necessary.
Upskilling Requires Better Workforce Planning
One of the more striking findings in the CIPD report is that many employers still lack a sufficiently strategic approach to workforce planning.
Forty-six per cent said recruitment remained ad hoc, replacing employees as they left without systematically reviewing current or future requirements. Thirty-six per cent collected no workforce-planning data in the areas examined.
That makes upskilling employees harder to target effectively. Training expenditure has limited value if an organisation has not identified which capabilities are critical, where gaps are likely to emerge and whether those gaps are best addressed through development, recruitment, redeployment or automation.
The CIPD recommends moving from reactive hiring towards skills-based workforce planning, focusing on a smaller number of meaningful measures such as skills gaps, future hiring demand and retention.
Practical Ways to Develop Skills Internally
Upskilling employees does not necessarily require expensive formal training programmes.
Employers can combine structured learning with coaching, mentoring, buddy arrangements, professional qualifications and supervised on-the-job development. Internal mobility can also allow employees to develop capabilities in different parts of an organisation while filling vacancies that might otherwise require an external hire.
The report found that around one in three employers addressing recruitment difficulties were recruiting people with potential, including candidates from different sectors, who could then be developed on the job.
The most effective approach will depend on the skill involved. Technical qualifications may require formal training, while management, communication and role-specific knowledge may be developed more effectively through experience, coaching and structured opportunities to take on additional responsibility.
Upskilling Employees as a Long-Term Strategy
The evidence suggests that upskilling employees is becoming more than a short-term response to recruitment difficulty.
A cooling labour market has reduced overall hiring, but it has not removed competition for skilled people. Employers are simultaneously dealing with rising costs, unsuitable applications, retention pressures, technological change and continuing skills shortages.
The strongest response is unlikely to be a choice between recruitment and internal development. Employers need to understand the capabilities their organisations will require and use the most appropriate combination of upskilling employees, internal mobility, apprenticeships, graduate routes and selective external recruitment to obtain them.
For employers, the practical starting point is therefore not a training programme. It is a clear assessment of current and future skills needs. Upskilling employees becomes most valuable when it is tied directly to those needs rather than treated as a generic employee benefit.
Employers: What This Means
The CIPD findings suggest that employers should treat upskilling employees as part of strategic workforce planning rather than simply as a response to individual vacancies. Although recruitment conditions have eased, skills shortages, unsuitable applications, retention pressures and rising employment costs continue to make internal development an important way of building workforce capability.
- Identify current and future skills gaps before deciding whether they are best addressed through upskilling employees, internal mobility, recruitment or automation.
- Use apprenticeships, graduate programmes, mentoring, coaching and on-the-job development to build sustainable talent pipelines rather than relying solely on recruiting experienced candidates externally.
- Review recruitment criteria carefully as employment costs rise. Decisions about applicants must remain objective and non-discriminatory, and reasonable adjustments must be made for disabled candidates where legally required.
- Measure whether learning and development is improving retention, internal progression and critical skills capability, so investment is directed towards areas of genuine workforce need. Only 16% of organisations currently collect data on the effectiveness of retention initiatives.
