Growing skills gap a 'major strategic threat' to economy

Some 80% of businesses reported facing skills gaps, where their existing or future workforce do not have the expertise required by industry. File picture: PA

Many employers are grappling with critical skills gaps and report struggling to recruit in the past 12 months, according to a new report by industry group Ibec. 

It described the growing skills gap as a "major strategic threat" to the economy and called for the Government to unlock the National Training Fund to allow employers to prepare their workforce for the future. 

The fund is financed by a levy on employers and collected through PAYE/PRSI.

Ibec's 2025 skills survey found Ireland continues to lag behind its European counterparts when it comes to lifelong learning, despite some recent improvements. 

The lifelong learning rate now stands at 16%, less than half that of countries like Sweden (42%), Denmark (32%), and Finland (32%).

The survey found 70% of employers reported facing issues in recruiting over the previous 12 months, with difficulty increasing according to seniority.

A further 80% of businesses reported facing skills gaps, where their existing or future workforce do not have the expertise required by industry. 

Employers are expecting the competition for skills and talent to increase in the next five years, making the situation even more challenging, notes the report. 

"Skills gaps are having a material impact on businesses by lowering productivity, impacting competitiveness, increasing costs, and stifling innovation," it states. 

The most critical challenge facing employers in Ireland is the shortage of candidates with sufficient applied, real-world experience, particularly in senior and leadership roles.

A large percentage of businesses reported candidates lacking the right practical experience (46%) or noting they do not have enough overall experience (35%).

"Conversely, few employers believed the issue lay with applicants not holding the right formal academic qualifications (12%)." 

Meadhbh Costello, a senior executive with Ibec, said: "With talent shortages growing and internal resources stretched thin, it is deeply concerning that firms who are actively contributing 1% of their payroll to the National Training Fund are not able to access the supports they need to prepare their workforce for the future." 

With a €3bn surplus projected for the National Training Fund, there is no excuse for underinvestment, she added. "Government must now move decisively to unlock these employer-contributed funds and jumpstart training and lifelong learning." 

• Jess Casey, Education Correspondent