The Economic Impact of Upskilling & Reskilling in 2026 (and Beyond)

Between the rapid uptake of digital transformation tools, like Artificial Intelligence (AI), and evolving market demands, the existing workforce’s skills are becoming less relevant. The World Economic Forum predicts that 44% of workers’ skills will be disrupted in the next five years, and six in ten staff members will require upskilling and reskilling by 2027.

Interestingly, both employees and employers show a strong interest in upskilling and reskilling initiatives. A study found that 74% of Millennials and Gen Z workers would quit a job that did not offer upskilling and development opportunities. Employers have responded to this feedback. According to LinkedIn’s 2024 Workplace Learning Report, 40% of organizations have mature career development initiatives.

For organizations, investing in upskilling programs is a forward-thinking approach that fosters resilience and innovation. But, like most valuable initiatives, upskilling and reskilling can come with a high price. It’s important to know what the economic implications for businesses and the economy are as a whole.

There is an initial investment in employee training programs of any kind to consider, especially for large organizations. In the last 12 months, US companies spent $101.8 billion on employee training.

This figure includes costs associated with:

However, there are also indirect costs to think about, such as developing tailored training programs or integrating new technologies to support learning.

Despite these costs, the impact of a well-executed upskilling strategy can offset those initial investments and sunk costs.

In my opinion, there are three benefits to upskilling and reskilling: financial, cultural, and innovational.

In terms of the bottom line, Forbes has estimated that those companies that emphasize employee development will yield 218% higher income per employee.

That’s a pretty good return on investment! Similarly, reskilling initiatives can lead to cost savings by reducing reliance on external hiring. Studies show that there is an average cost saving of 70-92% when employers upskill existing employees rather than hiring new ones.

However, there are also other benefits to training programs for your workforce like reducing turnover, increasing productivity, and improving employee engagement and loyalty.

A LinkedIn Workforce Learning Report found that 94% of employees would stay longer at a company that invests in their career development. Gallup has recorded that companies are 17% more productive when employees get the training they need.

Upskilling and reskilling prepare employees to adapt to new challenges, develop creative solutions, and drive business transformation. Which are all important skills in this day and age! Businesses are changing quickly to meet new market demands. In a matter of years, processes can change, new products and services can go to market, and entirely new functions can appear – and even disappear.

Reskilling programs help companies adapt to these shifts, allowing them to repurpose their workforce so they can always have a competitive edge.

The importance of learning and development extends beyond individual companies — it’s also important for driving economic growth and stability. We can already see industries evolving and technologies emerging that make certain skills in high demand, while others become obsolete. 

With an aging population to also consider, we could see a significant portion of the workforce get left behind. Which could result in a widening skills gap and potential economic instability.

Employee learning and development can support the economy by:

Looking ahead, I think we’re all still nervous around AI and automation. We hear stats like how by 2027, 43% of work tasks will be automated and how by 2025, 85 million jobs will be displaced by technology.

And while automation solutions are being looked at as a way to improve productivity and efficiency for manual tasks, people are still very important. And not just to run, manage, and improve the technology used. Soft skills like creative thinking, flexibility, agility, and project management are still just as valuable as those all-important new technical and technological skills.

In my opinion, the ROI of investing in workplace training initiatives far outweighs the drawbacks of the costs for both companies and the economy at large. By improving productivity, reducing hiring costs and increasing employee engagement, we’ll also see economic stability and reduced unemployment.

Similarly, those companies that prioritize reskilling and upskilling will be the ones that stay ahead of the curve. They will be the companies that not only survive but succeed, lead, and support the economy.

If you’re looking for support with talent development strategies, Pierpoint can help. Learn more about our personalized talent solutions, or book a call today to discuss your talent needs.