Gaps in career paths costs UK economy £96 Billion

New research from Pearson (FTSE: PSON.L) reveals gaps at career and learning transition points is costing the UK an estimated £96 billion in lost earnings.

The total cost – career transition inefficiencies and skills mismatches cost the U.K. economy £96 billion in earnings annually, or 4% of national output. That figure is broken down as follows:

• Automation disruption - as parts of jobs become automated, individuals needing to find new roles accounts for £64 billion in lost earnings.

• Education to work – the delays in moving between formal education and full-time employment accounts for £23 billion in lost earnings.

• Changing jobs – £9 billion is lost in the transition from one job to another as a result of involuntary job separations, such as redundancies.

• Generation at risk - There are an estimated 1 million people aged 16 to 24 not in employment, education, or training (the highest in a decade). Halving this number would mitigate losses by £6 billion.

Pearson has identified five actions the UK can take that will help stem economic losses and build the foundation for a more dynamic, productive, and resilient workforce. These include: 

1. Supporting educators with a future-facing curriculum that continues to build foundational knowledge and skills while adapting to technological, societal, and economic shifts.
   
   
2. Use AI and technology to personalise learning and reduce administrative tasks for educators, giving them more time to focus on teaching students how to learn, nurturing curiosity, critical thinking, and a love of learning.
   
   
3. Use AI-driven technology to understand workforce trends and needs, which can help inform education policy, develop flexible skilling pathways, and allow for targeted interventions that mitigate workforce shortages.
   
   
4. Incentivise organisations to invest in skills development through tax incentives, levy reforms, and public-private partnerships, focusing on priority sectors identified by Skills England.
   
   
5. Government, businesses, and educators must collaborate to champion policies and initiatives that instil a culture of continuous learning throughout our workplaces, communities, and daily lives.

Sharon Hague, CEO of Pearson UK, said: "The UK stands at a crossroads, grappling with stagnant productivity and widening skills gaps, challenges that threaten our economic future. To secure long-term prosperity, we must put education and skills at the heart of our national agenda. By fostering a culture of lifelong learning and harnessing the transformative power of AI and new technologies, we can build a more adaptable, resilient workforce — one that drives higher productivity, fuels innovation, and powers sustainable growth."

This report is part of Pearson's "Lost in Transition: Fixing the Skills Gap" research series that warns of a potential global "skills chasm" between employer needs and employee capabilities and urgently calls for a fundamental shift in approaches to learning and skills development.