Small-to-medium-sized businesses (SMEs) face strong headwinds in addressing skills gaps and evolving employee needs, finds CIMA's latest Mind the Skills Gap Report

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06 Feb, 2025, 08:30 GMT

Three-quarters of 18–34-year-olds (76%) believe a lack of skills training is holding back their progression in their careers.
Two-thirds (67%) of employees said they received no formal skills training (beyond mandatory training) in the last 12 months from their employer, despite 82% of SME employees wanting to upskill.
79% of employers have identified skills gaps in their organisation in the past 12 months.
Anticipated government changes to reduce Level 7 Apprenticeship Funding will put additional pressure on businesses to develop and upskill their workforces.

LONDON, Feb. 6, 2025 /PRNewswire/ -- Ahead of National Apprenticeship Week (10-16 February), The Chartered Institute of Management Accountants (CIMA) and Opinium Research have launched their latest Mind the Skills Gap report. It highlights how SME employers' needs and employees' expectations are drifting apart, impacting productivity and driving skills disparity among businesses and the workforce. The findings reveal a complex landscape where rising costs, technological advancements, government bureaucracy, and training needs overlap, posing challenges for economic growth.

"SMEs face mounting bureaucratic and economic challenges when it comes to addressing skills gap challenges, putting at risk the UK Government's "further and faster" vision for economic growth," noted Paul Turner, FCMA, CGMA, Vice President – UK and Ireland at AICPA & CIMA. He continued, "Investing in relevant training and embracing technological advancements, such as AI, is essential to empower employees and drive productivity. The government needs to sort out its skills strategy, including making access to training funding less bureaucratic for employers. Doing so would help unlock the UK's economic potential to deliver a prosperous future for both individuals and businesses."

With government changes anticipated to reduce Level 7 Apprenticeship funding, additional pressure will be put on businesses' ability to develop and upskill their workforces at a time when the UK needs [them] to be focused on growth.

Key findings – employers

Skills shortages: 79% of employers have identified skills gaps in their organisation in the past 12 months, with larger SMEs (100-249 employees) more likely to report these gaps (85%). Key areas include tech/IT (38%), AI (37%), and job performance skills (36%).
Complexity of government funding: 38% of employers who have not invested in formal training or accessed government funding find it too complex and time-consuming to engage with.
Rising costs: 32% of employers cite rising wage costs, including rises in minimum wage and National Insurance, as their biggest concern for 2025.
Investment in training: 82% of employers have invested in formal training and professional development for their employees, with larger companies more likely to do so.

Key findings – employees

Productivity concerns: 76% of younger employees (under 35s) believe a lack of skills training hinders their career progression compared to 54% of older workers (55+ year olds).
Training gap: Fewer than one in three SME employees have undergone training in the past year, yet 82% express a desire to upskill.

Industry-specific concerns

Traditional vs. non-traditional industries: While both industries are concerned about rising wage costs, traditional industries are also more concerned with taxation, and skills shortages, while non-traditional industries focus on cybersecurity, adapting to new technologies, and competition from larger businesses.

Barriers to training

Age disparity: Younger workers (under 35s) are significantly more likely to seek upskilling opportunities compared to their older counterparts (55+).
Financial and time constraints: Lack of budget (41%) and lack of time (39%) are the primary barriers for employer investment into training and development.

Drivers of skills gaps

Upskilling needs: The need to upskill existing employees is the biggest driver of skills gaps (41%), followed by struggles to hire the right people (35%) and the rapid pace of technological development (33%).
Age and skills gaps: Older employers (55+) are more likely to identify technical/vocational skills gaps, while younger employers (under 35) cite AI as the biggest gap.
Training types: Employees most commonly receive training in job performance skills (e.g. interpersonal skills, 34%) and technical/vocational training (32%). However, a significant gap exists in tech and IT training, which employers identify as critical.
Future training needs: Looking ahead to 2025, employees prioritise training in AI proficiency (21%), job performance skills (24%), and tech/IT skills (25%) ahead of other skills.

Employer strategies

Investment in training: 82% of employers have invested in formal training and professional development for their employees, with larger companies more likely to do so.
Recruitment and retention: Employers face a dual challenge in attracting and retaining talent: 93% must offer higher salaries, and 91% must invest in skills training and professional development.

Employee sentiments

Desire for growth: Almost half (48%) of employees hope training will improve their performance at work, and 40% hope it will lead to salary increases.
Confidence in job market: Despite training gaps, 85% of employees are confident they can secure the same role in a different sector, and 72% believe they can find another role within their current sector.

About the research

CIMA's Mind the Skills Gap research has been published in 2023, 2020, 2019, and 2018, mapping the growing disconnect between government, employer, and employee needs in the UK.

The Mind the Skills Gap 2025 survey was carried out among UK SMEs (organisations with 10-249 employees) by Opinium Research on behalf of CIMA.

Fieldwork for employers and employees took place online between November and December 2024 to a sample of 1,000 SME decision-makers and a sample of 1,000 SME employees.

Notes to editor

Traditional industries include agriculture, construction, education, financial services, healthcare, legal services, manufacturing, transport, utilities, wholesale, retail, and franchising.
Non-traditional industries include business services, hospitality and leisure, food and drink, IT/Computing, Marketing/advertising/PR/market research, media, professional services, and real estate.
Job performance skills refer to human-centric skills needed to do a job (e.g. communication, project management, and problem-solving).

About The Chartered Institute of Management Accountants

Founded in 1919, The Chartered Institute of Management Accountants^® (CIMA^®) is the world's leading and largest professional body of management accountants. As part of the Association of International Certified Professional Accountants, CIMA and its members and candidates operate in 188 countries and territories, working at the heart of business — in industry, commerce, the public sector and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its professional qualification and professional experience requirements to ensure it remains the employer's choice when recruiting financially trained business leaders.

About AICPA & CIMA, together as the Association of International Certified Professional Accountants

AICPA^® & CIMA^®, together as the Association of International Certified Professional Accountants (the Association), advance the global accounting and finance profession through our work on behalf of 597,000 AICPA and CIMA members, candidates and registrants in 188 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license, the CGMA designation and specialised credentials, professional development and thought leadership. We build trust by empowering our members, candidates and registrants with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.