Britain has one of the highest proportion of low skilled jobs in developed countries, with over one in five requiring no more than primary education, according to a new report.
At the other end of the scale, almost a third of workers in this country are over qualified for their job, said the Chartered Institute of Personnel and Development (CIPD).
The study found there were far fewer graduate jobs than graduates in the UK, meaning skills of many people were being under-utilised.
The two skills problems were "major factors" in the UK's poor productivity levels, said the report.
The CIPD called for a commission to be set up to help redress three decades of "misaligned" skills policy, saying successive governments had allowed a lack of co-ordination between Whitehall departments and policy priorities to send the economy in "contradictory" directions.
Little attention had been paid on how to utilise skills in the workplace, undermining productivity, said the CIPD.
The "low cost, low road economy" meant that Britain had the highest proportion of low skilled jobs in the OECD after Spain, with 22% needing no more than primary education, compared with 5% in Germany and Sweden.
Peter Cheese, CIPD chief executive, said: " Unless we address the demand side of the skills equation, we will fail to improve our poor productivity or to achieve the sustainable increases in real wages that have become such a dominant feature of the current media and political narrative.
"We've been down the road of simply increasing the supply of skills without increasing UK productivity or the number of skilled jobs in the economy. We now need to improve skills utilisation and stimulate demand for higher level skills through increasing the number of higher skilled roles available."