How training can play a part in solving the UK productivity puzzle

Even as UK employers continue to complain of productivity gaps and skill shortages, annual spending on training for each member of staff has fallen by as much as 28% in real terms since 2005, a level less than half the EU average. Emma O’Dell, skills and capability director at UK training provider BPP, highlights some practical steps that employers can take, helping them contribute towards boosting workforce productivity.

For too long, staff training has been treated as a ‘nice-to-have’ – a discretionary extra when budgets tighten. But failing to invest in workforce learning is now costing the UK economy. The 2025 Nash Squared Digital Leadership report reveals a surge in demand for AI skills, creating the most severe tech skills shortage in over 15 years. Meanwhile, a green skills gap of 200,000 workers threatens the UK’s net zero goals.

It’s time to stop viewing training as a cost and start recognising it as a vital investment in productivity, innovation, and competitiveness. The UK’s productivity puzzle has persisted for over a decade, with output per worker lagging behind comparable economies. Employers play a key role, yet training investment remains low.

The government’s Post-16 Skills whitepaper highlights the scale – 900,000 more skilled workers are needed in priority sectors by 2030, and skills shortage vacancies have risen from 22% to 27% since 2017. Among G7 nations, the UK ranks sixth for adults with level 4-5 qualifications – the ‘missing middle’ that drives productivity. The government’s goal of two-thirds of young people entering higher-level learning by 2040 shows intent.

Yet employer spending on training has dropped 28% in real terms since 2005 to just £1,530 per employee, which is less than half the EU average. This underinvestment is not a saving, but a leak.

There are signs of progress. Research shows employers plan on increasing training budgets and use diverse methods to address skills gaps. However, barriers remain. While 97% of employers feel confident identifying future skills needs, internal challenges such as regulations, talent attraction, and wellbeing limit their ability to act.

Pearson’s Lost in Transition study estimates poor learning transitions cost the global economy $1.1 trillion annually. Improving cognitive skills could boost GDP growth by 1.74 percentage points. The Post-16 Skills whitepaper reinforces this, where a level 3 qualification generates £78,000 in lifetime economic benefits, and employment rates jump from 43% (no qualifications) to 87% (level 4). Therefore training is not a perk, but a high-return investment.

What employees want

Structured, employer-led training works where information alone doesn’t. The government’s Cyber Security Skills report shows 49% of businesses still face basic cyber skills gaps, and staff confidence in handling personal data has declined since 2020.

BPP’s research finds technological trends are the biggest factor in workforce planning, with cybersecurity and talent attraction emerging as key challenges. Organisations need structured programmes like apprenticeships and tailored, on-the-job training that supports upskilling without disrupting roles.

There’s a growing disconnect between what employers offer and what workers want. Santander’s Tomorrow’s Skills report shows UK employees are more likely than global peers to expect training (51% vs. 43%). Yet nearly half cite cost and over a third cite time as barriers.

The government is addressing this head on. From April 2026, the Growth and Skills Levy will allow employers to use levy funds for short, flexible courses in critical areas like AI and engineering. The Lifelong Learning Entitlement will give individuals four years of loan funding for higher-level education, usable throughout their careers.

To attract and retain talent, employers must remove barriers by offering funded, work-time training. Training during working hours shouldn’t be seen as lost productivity, but as the route to achieving results.

Crucially, BPP’s research shows over 90% of employers view government-funded training as important to their strategy and are aligning with national skills priorities. The Growth and Skills Levy and Lifelong Learning Entitlement offer the funded pathways needed.

There’s a mismatch between what companies provide and what workers want. While employees often seek training in tech and AI, technical skills alone aren’t enough. Adaptive professionals – those who see connections, anticipate change, and understand systems, are key to thriving in a fast-changing world.

Investing in the future

Workplace Success Skills are essential. These are not ‘soft skills’, but the hardest to automate, the hardest to find, and the most valuable to build. Skills like critical thinking, communication, and adaptability empower professionals to turn knowledge into results.

The UK’s Modern Industrial Strategy identifies 10 priority sectors, including construction and health/social care, where both technical and adaptive skills are critical. Effective training must layer technical capabilities onto a foundation of human skills.

Without intervention, capability gaps will widen. Learning must be accessible, inclusive, and relevant for all.

To solve the UK’s productivity crisis, funded, prioritised, and protected training must be central to business strategy. Government is laying the groundwork – Skills England will provide labour market insights, the Growth and Skills Levy adds flexibility, and sector packages are investing £625 million in construction and £187 million in digital and AI.

But employers hold the key. With nearly one million 16–24-year-olds not in education, employment or training, and most new jobs requiring level 4+ qualifications, the talent pipeline depends on employer engagement. Training can no longer be the ‘nice-to-have’ that gets cut when budgets tighten. It’s the essential investment that determines whether the UK builds the adaptive, skilled workforce needed for growth – or continues to leak talent, productivity, and competitive advantage. The choice is clear: invest in people now or pay the far greater cost of inaction later.