The UK is facing a fresh workforce emergency, with more than half of its most experienced frontline employees set to retire within five years — a shift that could cost the retail sector alone £28 billion in lost productivity.
New research from frontline employee platform Flip and consultancy Workplace Intelligence reveals that 78% of managers lack confidence in their organisation’s ability to prepare for widening skills gaps, raising fears of a “brain drain” in critical sectors such as retail and manufacturing.
The report highlights an urgent challenge for employers, as 68% of managers say vital expertise will be lost when older employees leave, leaving behind a generation of underprepared younger workers. It’s already affecting operations, with three in four managers reporting that skills shortages are actively reducing their team’s efficiency.
Flip co-founder and CEO Benedikt Brand said it represented a “cliff edge” for UK industry. “It’s vital that businesses capture the invaluable expertise of retiring employees and make meaningful investments into developing the Gen Z employees who make up their future workforce,” he said. “Without seamless knowledge transfer between generations, productivity will stall, and these essential industries will suffer.”
Retail and Manufacturing at Highest Risk
The research, based on responses from 500 UK frontline managers and employees, found that 73% of managers rely on a small number of experienced staff to keep operations running smoothly — a dependency that leaves businesses vulnerable to bottlenecks and burnout as these workers depart.
Retail has emerged as the hardest-hit sector, according to the CIPD Labour Market Outlook, which notes a sharp fall in employer confidence and increased redundancies. The skills crisis is already costing businesses, with frontline employees spending an average of 12 hours per week — nearly four months a year — helping colleagues who lack essential skills.
Workplace Intelligence managing partner Dan Schawbel warned of a widening generational divide. “The new generation gap isn’t just about age; it’s who has essential work skills and who doesn’t. Many employers aren’t doing enough to pass knowledge on to younger workers before older employees retire.”
He added that there was a “lot of goodwill, with experienced workers wanting to support new hires, but no one has the time or tools they need to train effectively”.
Gen Z Talent Slipping Through the Net
Some 92% of managers say Gen Z employees under 25 lack the technical skills needed to perform effectively, according to the research, while more than half of young frontline workers feel their skills go unrecognised.
A further 63% believe they’ll need to leave their current industry to advance.
Observers say the disconnect risks creating a dual-generation talent vacuum, as businesses struggle both to retain experienced staff and to nurture the next generation.
What Employers Can Do
While the challenges are significant, experts say there are clear, actionable steps businesses can take to tackle the looming skills shortage and strengthen operational resilience:
- Invest in structured knowledge transfer programmes: Organisations should formalise mentoring and shadowing opportunities between older, experienced workers and younger recruits. Embedding this within daily operations ensures valuable expertise is passed on before key staff retire.
- Modernise frontline training: Introducing digital learning tools, on-demand training apps and peer-led development opportunities can upskill younger employees faster, while also reducing the burden on experienced staff to fill knowledge gaps informally.
- Recognise and retain younger talent: To address frustrations among Gen Z workers, employers should review progression pathways, involve younger staff in operational decisions and actively acknowledge their contributions. Providing clear development plans and opportunities for advancement will also improve retention.
- Broaden recruitment strategies: With many sectors facing hiring challenges, businesses should consider targeting untapped talent pools such as mid-career returners, apprentices and candidates from adjacent industries who bring transferable skills.