New Report Shines Light on 2025 SME Skills Horizon

A new report into the 2025 skills and recruitment outlook of small and medium-sized enterprises (SMEs) in England reveals nine in 10 (90% of businesses) are anticipating some kind of skills gap within their business, with the biggest at entry level (32%)*.  

Now in its third year, the Skills Horizon Barometer, launched by the Skills for Life campaign and featuring commentary from Specsavers and a collection of small businesses, also found that SMEs are more likely to have noticed a skills gap at entry level than in specialist areas (32% versus 29%). However, concerns about retaining staff have decreased since last year – just over one in four (27%) SME employers cited it as a worry this year, compared to two fifths last year and the year before (40% in 2024 and 41% in 2023).  

When it comes to specialist skills, opportunities with AI are firmly on the radar for the year ahead, as nearly a quarter (23%) are poised to train their staff in AI related skills or recruit those with knowledge in the field. The research found one in five (19%) are regularly using AI in day-to-day operations, with a further 20% using it occasionally. One in five (19%) also say experience in AI is an asset on a CV for potential new recruits.  

While AI knowledge is high on the recruitment agenda for SMEs, they are also looking beyond the skillset to find human characteristics or transferable skills that are the right fit for their organisation too. The top five to pique the interest of employers in 2025 are:  

1. A good work ethic (36%) 
2. A team player (28%) 
3. A quick learner (28%) 
4. Confidence (24%) 
5. Adaptability (23%) 

The ranking of these characteristics is largely consistent with last year’s findings, except for the addition of ‘adaptability’, which has moved ‘ability to work under pressure’ out of the top five. This could indicate a different approach to working might be on the cards for 2025.  

Exploring the type of candidates SMEs are looking for reveals employers looking to offer opportunities to those early on in their career, but crucially candidates who have some experience (44%). While one quarter (24%) of businesses still look to hire those from traditional academic routes, such as university, a fifth (21%) of firms would hire straight from school or college, supporting young people with relevant training to build up their skills, and 30% would look to hire candidates with experience from a different field.  

The highlighted findings from the latest Skills Horizon Barometer look to help SMEs understand all the technical education training and employment schemes available to them, including Apprenticeships, T Levels, Skills Bootcamps, HTQs, as well as numeracy and digital skills courses. 

Louisa Doyle, CEO at Mesma, in Newcastle said: 

“We’re a small business of just 10 people, but we’re looking to double our size by November this year. We have an apprenticeship-first policy when it comes to recruitment, and we’ve also taken on T Level students – both of these will continue to be a priority in the year ahead.   

“We found it incredibly difficult to recruit after Covid, particularly with our software developers as we are a smaller business and often have to be creative to ensure we offer benefits that allow us to compete with those that larger businesses offer. Technical education training routes allow us to access new talent who we can then help to grow, all whilst giving them space to create their own role.” 

Minister for Skills, Apprenticeships and Higher Education Jacqui Smith said:

“Meeting the skills needs of the next decade is central to delivering the Government’s Plan for Change.  

“Employers are key partners in our mission, helping address skills needs across sectors like AI, green tech, and construction. Using Skills Bootcamps, apprenticeships, HTQs, and T Levels, we’re supporting businesses and individuals to upskill, and establishing Skills England to find and fill skills gaps and support sustained economic growth. 

“The Skills Horizon report highlights the progress we’re making together—giving people the skills they need to seize opportunity and drive growth.” 

A collaborator of the Skills Horizon Barometer, Dena Wyatt, Head of Apprenticeships at Specsavers, said: 

“We’re always looking for new hires who are early on in their career and our apprenticeship programme is a vital part of our recruitment strategy as we plan to recruit around 500 apprentices in 2025. Apprentices support our other employees in a range of ways and across different roles. Being a long supporter of such schemes, we find our apprentices are committed, hardworking, and innovative – they want to learn and have passion.   

“We invest time in our apprentices, building their knowledge and shaping them to be really valuable team members, so naturally we want to hold onto them after they complete their course. Despite it being a stepping stone in their career, 90% of apprentices stay with us after completing the scheme, with roughly 60-65% going on to study further. 

“Having an offer that attracts a diverse talent is a real asset, and we will continue to make technical education a key part of our recruitment and development strategy.” 

HRD Connect Curators of the New Business Landscape. HRD Connect produces industry-recognized content for senior HR leaders. Through articles, case studies, Q&As, podcasts, events, and more, we offer truly progressive and cutting-edge insights designed to help people leaders address core HR challenges and add greater value to their business.

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