Comment: The UK economy cannot wait for the next generation of AI and digital talent

In today’s fast-evolving global economy, the UK finds itself at a critical juncture. The nation’s ability to compete on a global scale is becoming increasingly dependent on being able to harness the potential of artificial intelligence (AI) and digital technologies.

However, the UK faces a pressing challenge – a growing skills gap in AI and digital expertise. Without immediate action to cultivate and attract this talent, the UK risks falling behind its global competitors. Industrial powerhouses such as the UK’s key engineering sectors must lead the way in adopting and nurturing the skills for the future.

The urgency of this challenge has prompted decisive action at the national level. In November 2024, Make UK launched the Industrial Strategy Skills Commission – an initiative bringing together leading experts from education, training, and industry to address the growing skills deficit in manufacturing and engineering.

This commission, co-chaired by former Minister for Skills Robert Halfon and former Deputy Labour Party Leader Tom Watson, represents a cross-party recognition of the challenge ahead. As Halfon notes, the commission "must change the perceptions of working in industry and find the quickest and most effective way of attracting the best talent into the engineering and manufacturing sectors."

The commission's focus aligns with the broader need for immediate action on AI and digital skills. With manufacturers facing not only current vacancies but also the challenge of an aging workforce and increasing early retirements, the sector cannot afford to wait for the next generation to develop these critical capabilities.

Recent data from Skills England's "Occupations in Demand" index (September 2024) provides compelling evidence of the immediate skills challenges facing the UK economy. The analysis reveals that 7.8 per cent of the UK's working age population (2.5 million workers) are in critically demanded occupations, with a further 38.5 per cent (11.6 million) in elevated demand positions.

In the engineering sector specifically, the data highlights high demand for roles that will be crucial to driving AI adoption and digital transformation, and that combine traditional engineering expertise with emerging digital skills. These range from engineering project managers that are key to leading transformation initiatives to aerospace engineers that are leveraging AI for aircraft design and maintenance.

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The index reveals that most workers in critical demand occupations require less than a degree-level qualification, while most workers in elevated demand occupations require a degree or equivalent. This need for both technical and higher-level qualifications creates a complex challenge for skills development strategies, especially as these roles increasingly require digital literacy and AI awareness alongside traditional engineering expertise.

AI and digital technologies have already proven their worth as drivers of economic growth. According to a 2021 report by PwC, AI alone could contribute up to £232bn to the UK economy by 2030, accounting for a 10.3 per cent boost to GDP.

Moreover, digital technologies such as cloud computing, big data, and cybersecurity are becoming the backbone of modern business operations. The UK’s digital economy has grown significantly in recent years, contributing over £150bn annually. However, sustaining this growth requires a steady current and future pipeline of skilled professionals who can drive innovation and maintain a competitive edge. This will be done through upskilling, reskilling and more fundamentally a rethink of the way we deliver skills as we progress through a technological revolution.

With any technological revolution comes the need for new skillsets. However, the role of emerging digital technologies and artificial intelligence poses a different set of challenges.

Across the engineering sector, repetitive processes such as CAD modelling in design-based fields or analysis of data sets for data engineers will be impacted. These can free up time in order for engineers to dedicate more resource to other aspects of their roles which require softer skills such as creativity and problem solving.

While AI has the potential to be a job creator, it also is likely to displace and completely rewrite the way in which many industries function and change the roles within these sectors. With this considered, it is vital that businesses across the engineering sectors and beyond act swiftly to ensure that the skills gaps that we are beginning to see emerge are addressed.

As AI automates aspects of many roles and the entirety of others, ensuring that employees are equipped to embrace its role and adapt effectively is key.

For existing employees, businesses must work to develop training programmes and continuing professional development opportunities that allow employees to leverage AI tools to enhance productivity.

Courses and training in the adoption of AI-powered tools to make the design process more streamlined or becoming proficient in a coding language are just examples of how businesses can ensure that employees are continuing to learn new skills as the economy shifts.

Owing to an aging workforce and the speed and rate of change of these new technologies, skills requirements need to be met sooner rather than later, and businesses cannot wait for a new generation of workers to plug the gaps.

Engineering sectors have long been at the forefront of adopting new technologies and innovations. With this, it can be expected that in future years, as technologies develop and people seek to retrain, many of these sectors will be viewed as a prime area for new skills to be employed.

Artificial Intelligence and Digital Technologies will pose challenges to the business community, employees and the economy. However, they will also offer huge opportunities for growth, productivity and innovation. For businesses, embracing upskilling and offering further training opportunities for staff will ensure competitiveness and reduce recruitment costs. On a broader level, bridging the skills gap now and ensuring that we do not wait for a new generation to provide these skills will promote an inclusive economy and ensure more people can thrive in a new digital world.

Cassandra MacDonald, Dean of School of Technology, BPP