More workers, fewer vacancies: why skills remain difficult to find

The UK labour market in 2026 presents a complex picture for employers. Overall labour supply has increased relative to demand, with vacancies declining and the number of unemployed people per vacancy rising. However, this does not necessarily translate into easier access to the skills and capabilities organisations require.

For strategic workforce planning, the distinction between labour supply and workforce capability is increasingly important.

The latest ONS labour market data reports UK unemployment at 4.9% between April and June 2026. Payrolled employees also fell by 86,000 compared with the previous year. Meanwhile, ONS vacancy data records 707,000 vacancies between May and July 2026, a 2.7% decrease compared with the same period in 2025. There were 2.5 unemployed people for every vacancy, compared with 2.3 a year earlier.

These figures indicate a less constrained labour market overall. They do not, however, demonstrate that organisations can readily access the capabilities required for future growth.

The difference between a headcount gap and a skills gap

The latest Employer Skills Survey identified 250,500 skill-shortage vacancies in 2024. These are vacancies that employers reported as difficult to fill because applicants lacked the required skills, qualifications or experience.

The distinction is significant for workforce planning. An organisation can have access to a sufficiently large labour pool while still facing shortages in specific skills, occupations or levels of expertise.

Effective workforce planning therefore needs to consider more than future headcount requirements. It needs to establish:

• The skills and capabilities required to deliver future strategy

• The level of proficiency required

• When those capabilities will be needed

• The availability of those capabilities in the external labour market

• The extent to which they can be developed internally

• Whether sufficient workforce capacity exists to meet future demand

This shifts workforce planning from headcount forecasting towards a broader assessment of workforce capability.

From workforce numbers to workforce capability

Workforce planning is fundamentally about understanding the gap between the workforce an organisation has today and the workforce it will require in the future. This includes numbers, skills, knowledge and capacity.

The relevant timeframe may extend two, five or ten years, depending on the organisation and its strategic objectives. Changes in technology, regulation, customer expectations and industry demand can all alter the capabilities required. Roles that are critical today may change substantially, while new skills may become essential to future performance.

The Skills England Annual Skills Report 2026 reinforces the importance of this longer-term perspective. Its sectoral assessments consider current and future skills demand alongside skills supply and the pathways into priority occupations. The analysis points to significant growth in demand for a number of occupations over the next decade, increasing the importance of reskilling and upskilling.

For employers, the implication is that workforce planning cannot be reduced to recruitment planning.

Multiple routes to closing future workforce gaps

Recruitment is only one response to a workforce gap. Organisations can build capability through training and development, buy it through external recruitment, move existing employees through internal mobility, or borrow capability through contractors, partners and other forms of contingent workforce.

Technology and organisational design provide additional options. Automation can reduce the volume of human capacity required for particular activities, while changes to roles, processes and operating models can alter the skills and workforce structure required.

The appropriate response will depend on the capability in question, the timeframe involved and the organisation's wider strategy. A robust workforce plan therefore considers a range of interventions rather than assuming that additional recruitment is the default solution.

Workforce planning as a strategic capability

The cost of failing to anticipate workforce requirements can extend beyond unfilled vacancies. Reactive recruitment can increase hiring costs, while insufficient investment in retention, development and internal mobility can result in organisations repeatedly sourcing capabilities externally that could have been developed within the existing workforce. Strategic workforce planning provides a framework for identifying these requirements earlier and aligning workforce decisions with business strategy.

The central consideration is not simply how many people an organisation will require. It is the combination of people, skills and capacity required to deliver its strategic objectives, and the actions needed today to secure those capabilities for the future.

As the UK labour market becomes less characterised by an overall shortage of workers and more by variation in the availability of specific capabilities, this distinction will become increasingly important. Organisations that understand their future workforce requirements early will be better positioned to manage costs, improve productivity, retain critical capability and respond to changes in their operating environment.