There are growing concerns among UK businesses about the impact of retirements on the workforce. A study from Flip, in partnership with Workplace Intelligence, finds that 78% of managers lack confidence in their organisation’s ability to address future skills gaps.

With 57% of experienced frontline workers expected to retire within five years, 68% of managers fear critical expertise will be lost, reducing productivity. The retail sector alone could see losses of up to £28 billion due to these shortages.

The findings align with the latest CIPD Labour Market Outlook, which identifies retail as the sector most affected by declining recruitment and employee engagement. Nearly a third of businesses plan to reduce hiring or make redundancies, further compounding concerns.
Skills Gaps Already Affecting Productivity

The study, which surveyed 500 UK frontline managers and employees in retail and manufacturing, highlights the effect of existing skills shortages. Employees spend an average of 12 hours per week—equivalent to nearly four months per year—assisting colleagues who lack essential skills.

Nearly 72% of managers say skills gaps are already reducing efficiency, while 73% report relying on a small group of experienced employees to maintain operations. This dependence increases the risk of bottlenecks and burnout. A majority of UK managers (81%) recognise that technical expertise is concentrated among older workers, making their retirement a significant risk to business continuity. As these employees exit the workforce, preserving institutional knowledge becomes increasingly difficult.

Generational Divide in Workforce Skills

The research highlights a widening skills gap between generations. While older workers hold critical operational knowledge, many lack the time and tools to transfer it effectively. Meanwhile, 92% of UK managers report that Gen Z employees (under 25) do not yet have the technical skills needed to perform effectively.

This disconnect is affecting retention. More than half (57%) of Gen Z frontline workers feel their skills are overlooked due to their age, and 63% believe they need to leave their industry to progress in their careers. These findings suggest businesses are struggling to develop and retain their future workforce.

Benedikt Brand, co-founder and CEO of Flip, warns of the long-term risks, “Industries that form the backbone of our economies are facing a cliff edge when it comes to critical skills. 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. Without seamless knowledge transfer between generations, productivity will stall and these essential industries will suffer.”

Addressing Workforce Challenges

Dan Schawbel, Managing Partner at Workplace Intelligence, emphasises the need for businesses to act. “The new generation gap isn’t just about age — it’s who has essential work skills and who doesn’t. The research shows many employers aren’t doing enough to pass knowledge on to younger workers before older employees retire.”

Schawbel notes that while experienced workers are willing to support new hires, they often lack the necessary time and tools to train effectively. If businesses fail to address these challenges, they risk long-term skills shortages that could weaken operational efficiency and slow economic growth.