Harnessing young talent pipelines in a digital world – could NEETs be supported by employers to plug the skills shortages?

A new report from The Open University reveals a growing mismatch between employer needs and available talent – in turn preventing organisations from addressing persistent skills shortages while large numbers of young people remain locked out of the workforce.

The ‘Business Barometer 2026: Harnessing young talent pipeline in a digital world’ is based on a survey of 1,500 UK organisation leaders and 1,000 young people aged 16–24 who are currently not in education, employment or training (NEET). It finds that over half (57%) of employers are experiencing a skills shortage, a figure which is up 3% from last year. Additionally, 42% revealed they’re expecting this figure to worsen.

The report highlights the growing impact Artificial Intelligence (AI) is having – with over half (51%) seeing an impact on hiring or recruitment processes. The report shows signs of some businesses decreasing early-career roles with one in five (19%) organisations reporting a decrease in recruitment over the last 12 months, and 42% have put the decrease in this recruitment down to the wider adoption of AI doing more-entry level tasks. Not surprisingly, 16–24-year-old NEETs agree that AI is threatening their future job prospects (42%) and are wary about AI impacting their future careers (49%). With more than a million young people aged 16 to 24 currently classed as NEET, the digitalisation of early-career roles is a concerning reality for solving this issue and for employers who can’t build future talent pipelines.

Positively, almost half (47%) of employers report they are currently prioritising the recruitment of young people to combat this. The latest Business Barometer finds that young people show a strong appetite to work and develop skills, yet they face significant barriers to entry, even though:

• 68% would be willing to train or upskill to improve their job prospects
• 78% would stay longer with an employer that offers training and development

Even though 80% of employers say they are prepared to train young people entering the workforce, their words are not always backed by action. Only 43% offer work experience placements, and around a third offer graduate schemes (34%) or internships (33%). In addition, just 34% have initiatives for workers under 25, and only 11% target NEETs directly.

NEETs say that mental health challenges (40%), lack of experience (37%) and feeling underqualified (35%) are key barriers they’re facing to become truly work ready. This reinforces a gap between employer expectations and young people’s access to the experience and support needed to enter work.

It isn’t all a straightforward fix – as economic pressures are massively shaping employer behaviour. More than three-quarters of organisations (76%) say economic uncertainty has made recruitment or training more difficult, while 43% have hired fewer staff over the past year.

Despite advances in AI, most employers are reporting skills shortages that continue to affect organisational performance, with 54% reporting increased workloads, 44% lower morale and 35% declining staff wellbeing. Employers and educational providers must partner to ensure the next generation does not become a lost generation by adequately supporting them to become the leaders and experts of tomorrow.

Mark Durkin, Pro Vice Chancellor, Partnerships and Enterprise at The Open University commented:

Young people are, of course; the digital experts, nurses and engineers of the future and we need to work together to build those vital future skills pipeline[PS1.1]s in a more flexible and accessible way through innovative partnering. If we are as serious about growth as we say, we must be acting with the same urgency when it comes to creating opportunity and providing our young people with the knowledge and skills to convert such opportunity into value; for themselves, the economy and wider society.

Mark Durkin Pro Vice Chancellor, Partnerships and Enterprise at The Open University

Find out more how employers can harness new talent: