Ministers are set to unveil plans to improve key skills such as literacy and numeracy amid employers' concerns about a shortage of properly qualified staff.
Employers are concerned about basic literacy and numeracy
A White Paper, due to be published on Tuesday, is to offer new adult learning programmes and encourage employers to help tackle training problems.
News agency PA quotes a government source as saying skills have been the economy's Achilles' heel for too long.
Business leaders agreed but warned they could not afford to spend more.
The government source told PA: "There is no such thing as a 'job for life' anymore.
"We need to equip employers and individuals to overcome the insecurity and challenges of globalisation and achieve the skills they need for 'employability for life'.
"This means supporting individuals to fulfil their potential, whether it be moving from welfare to work, getting the most out of their job or moving out of the low pay, low skill trap," he said.
This meant offering employers more say in the design of vocational qualifications, and identifying what skills and training were needed.
"Working together with business and unions we now have a real opportunity to make a fundamental change for the better, for individuals, for employers, for the country," he said.
A spokesman from the Confederation of British Industry (CBI) said: "We absolutely agree there is a significant problem with basic skills, by which we mean reading, writing and numeracy.
"There is something like 40% of youngsters leaving school without C-grade equivalent passes in both English and maths."
He said that since 1997 that two million young people leaving school lacking the basic skills employers wanted.
"We need to make sure our schools are not putting out numbers as shocking as this in the future," he said.
The CBI calculated British businesses already spent more than £23.5bn a year on training staff.
But the CBI's view was that many businesses did not have the resources to spend further money, and that the education system had to make sure people left school with the proper skills.