AI Fails to Close Skills Gaps as Nine in 10 Employers Expect Hiring Challenges to Persist in 2026

Businesses are entering 2026 with renewed confidence and ambitious recruitment plans, yet almost all expect hiring to remain a challenge despite rising investment in artificial intelligence (AI).

Employers are betting on automation to ease pressure on staffing, but new data shows skills shortages remain the biggest threat to growth, even as organisations accelerate hiring plans. According to a new survey, 91% of employers anticipate hiring challenges this year, with skills shortages and technology-driven change topping the list of concerns. This mirrors other reports showing companies are struggling to hire for AI-enabled roles and are paying premiums for scarce skills, as reported. 

The Harris Poll on behalf of Express Employment Professionals among 1,000+ US hiring decision-makers, shows that 85% of hiring managers have a positive outlook for 2026, nearly matching levels seen in late 2024. However, confidence is uneven. Over a third (37%) still report a negative outlook, unchanged from last year, underlining the fragility of employer sentiment.

RECRUITMENT OUTLOOK FOR 2026

Despite this, recruitment plans are accelerating. Two-thirds of companies plan to increase headcount in the first half of 2026, the highest level recorded since the study began in 2020. Growth ambitions are driving demand, with 39% hiring to expand into new markets and 38% seeking new skills to support emerging areas of their business.

Temporary and contract labour is playing a growing role. More than one in four employers (26%) plan to hire contingent workers in 2026, while 83% say they are willing to use temporary or contract staff to meet business needs, an increase on last year. The shift reflects a wider global trend, with 65% of company leaders planning to expand their use of contingent workers.

IMPACT OF AI & PAY ON SKILLS SHORTAGES

Employers are also becoming more selective about where they source talent, noted the survey. Interest in traditional talent pipelines remains, but with a more targeted approach. While 51% remain open to hiring recent college graduates, fewer expect to recruit college students (33%) or retirees (10%) in 2026.

At the same time, automation and AI are reshaping workforce decisions. Among companies planning to reduce staff numbers, 39% cite increased use of technology, while 33% say they will not replace employees who leave, suggesting productivity gains are offsetting some hiring demand.

Yet technology has not solved the core problem. More than a third of employers (36%) report having open roles they cannot fill and the main barrier is skills, not pay. Half of companies (50%) say applicants lack relevant experience, up from the year before, while 26% struggle to assess informal or self-taught skills – an issue echoed in broader research showing a widespread shortage of practical AI and tech skills in the workforce. 

By contrast, fewer employers now cite compensation as a barrier, with 21% pointing to unwillingness to work required hours, 19% to uncompetitive pay and 14% to uncompetitive benefits, reinforcing the view that shortages are driven by capability rather than cost.

HIRING CHALLENGES PERSIST

Looking ahead into 2026, employers expect the pressure to intensify. Alongside the 91% anticipating hiring challenges, the most common concerns for 2026 are AI-related complexities (46%), finding qualified candidates (40%) and increased competition for talent (28%). Fewer now cite a broad mismatch between the labour market and business needs (20%), indicating that shortages are becoming more role-specific.

Other recent data shows that even as AI tools proliferate in the workplace, a significant share of employees and organisations remain unprepared for their impact – a dynamic that further complicates recruitment and retention strategies. 

Bob Funk Jr, CEO, President and Chairman of Express Employment International, said companies face a strategic moment. “As we move into 2026, companies that thrive will be those that invest in people and adaptability. Technology will continue to transform how we work, but human expertise and creativity remain irreplaceable,” he said. “Closing skill gaps isn’t just a hiring challenge; it’s a strategic opportunity for long-term growth.”

HOW EMPLOYERS CAN COMPETE FOR SCARCE TALENT

For organisations struggling to recruit in a tight market, the survey and related research covered on Fair Play Talks point to several clear actions:

• Rethink how skills are recognised: With 26% struggling to assess informal or self-taught experience, employers that broaden evaluation criteria can access a wider talent pool — including those with non-traditional AI and tech capabilities, as outlined in this article.
• Invest in upskilling and reskilling: With widespread AI adoption yet low preparedness in many teams, structured training helps employees contribute to tech-enabled roles and reduces reliance on external hires, as reported. 
• Leverage contingent workers strategically: Temporary staff can address immediate gaps while permanent capability is developed.
• Be explicit about how AI supports roles: Clear communication about how technology augments human work – rather than replaces it – makes roles more attractive to candidates and reduces anxiety about future job security.
• Refine job design and candidate outreach: Sharper job descriptions and targeted outreach help roles stand out in an increasingly competitive market.

As AI and technology continue to reshape work, the dual challenge for employers in 2026 will be finding people with the right skills and equipping existing staff to thrive alongside intelligent systems – a balance that could determine who flourishes in the next phase of the labour market.

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