The skills shortages holding back UK businesses are not always the ones that dominate the headlines. A survey of 908 HR professionals and line managers by training provider City & Guilds found that more than a third of UK businesses, 38%, say shortages in soft skills such as communication and problem solving are restricting productivity and growth.

Two thirds of respondents said candidates with strong soft skills are becoming harder to find. The consequences show up in the daily running of businesses, not just in strategy documents.

A productivity problem in disguise

The operational effects are concrete. Among affected employers, 37% reported operational errors and delays, higher staff turnover and low morale. A third reported lower efficiency overall, and 29% pointed to poorer customer service caused by the gaps.

The survey also underlined how highly employers value these capabilities once they have them. Some 74% said soft skills matter more than technical skills for workplace success, a striking figure in an economy often described as competing on technical expertise.

Interview coach Georgina Kvassay said the impact is quickly practical. “When these skills are missing, misunderstandings, duplicated work, poor prioritisation, unnecessary escalation and delays follow,” she said. “Individually these can seem small, but collectively they have a significant impact on productivity and performance.”

The findings land against a familiar backdrop. UK productivity growth has lagged that of comparable economies for years, and surveys like this one suggest some of the explanation sits in everyday working practices rather than in technology or infrastructure alone.

Recruitment screens out the skills employers need

One finding deserves particular attention from hiring teams. Some 43% of employers now use artificial intelligence to screen or filter candidates, and 69% believe these tools prioritise technical skills over the human capabilities businesses say they need most.

Andy Moss, interim chief executive at City & Guilds, put the risk plainly. “AI-powered recruitment risks screening out the human skills employers say they need most,” he said, adding that communication, problem solving and time management matter just as much as technical know-how, if not more.

The recruitment industry is aware of the tension. Several assessment providers have begun adding structured behavioural interviews and situational judgement tests to their screening stacks, explicitly to surface the human capabilities that keyword filters miss.

Building the pipeline

The challenge is sharpest among young people entering work. Of the 1,014 people aged 18 to 24 surveyed, only 40% felt completely confident communicating face to face, a finding with obvious implications for how schools, universities and employers prepare the next generation.

For employers, the lesson is twofold. Hiring processes may need redesigning so that human capabilities are assessed rather than filtered out. And for the people already inside the business, structured development of communication and problem solving may be the most under-rated productivity investment available.

Some employers are already acting. Apprenticeship and training budgets are increasingly directed at structured communication practice, coaching and scenario-based learning, the kinds of development that technical courses alone cannot deliver.