Too many pupils are leaving school with no qualifications, teachers have warned after the 2011 census showed more than one in four people in Wales have none.
A total of 26% of adults have no formal qualifications, including GCSEs, A-levels and apprenticeships.
While it is an improvement on 10 years ago when a third were unqualified, NUT Cymru says action is needed to stop pupils dropping out of school.
Business organisation CBI Wales is also concerned at a lack of basic skills.
The Welsh government said it was working with schools and with adults already in the workforce to tackle the low levels of qualifications.
The census, published on Tuesday, showed that 651,000 of people aged 16 and over lack any formal qualifications.
That is better than the 2001 census, when 33% in Wales did not have any qualifications, but the nation is still one of the poorest performing areas surveyed for the 2011 census.
Only the regions of the north east of England and the West Midlands had a higher proportion of residents with no qualifications, according to the the Office for National Statistics (ONS) data.
In Blaenau Gwent nearly 40% of people do not have any qualifications - the highest percentage in Wales.
However, at the other end of the scale, 614,000 (24%) of people living in Wales have a degree, according to the statistics.
That is an improvement on the one in six people with degrees which was recorded in the 2001 census.
Owen Hathway, Wales policy officer at the NUT, said it was "surprising and a concern" that so many people have no qualifications.
He said he feared it showed that many had fallen outside the school system.
"You would assume that if someone is in school they would get at least one GCSE," he said. "It's rare that if someone's in school they come out without any qualification.
"This figure needs to be worked on, whether it's to do more work with education in schools but also to question how many children are slipping through the system and not going to school."
He said work was needed to stop long-term truancy, along with putting as much emphasis on teaching vocational qualifications as academic ones in order to engage some pupils more at school.
"Qualifications don't suit everyone. A lot of people don't have the capacity or interest to do a degree," he added.
'Numeracy and literacy'
Emma Watkins, director of CBI Wales, said: "What employers want first and foremost is basic skills like numeracy and literacy.
"If there's a large percentage of people without the basic qualifications that's something employers would definitely be concerned about.
"An employer will always train someone to do the job they need to do but we have got to have the basics to work with."
But she added that the Welsh government was doing a lot of work to try to solve the the problem, such as providing funding for vocational training and by focusing on what employers want in their workforce.
"I think we have got to hope that things will start to improve," she added.
A Welsh government spokesperson said it was working to improve education for young people, while ensuring that adults already in the workforce were helped to raise their skills.
A review was announced last month into the structure of educational services in Wales and it also wants to improve levels of literacy, numeracy and reduce the impact of deprivation on education attainment.
"We are working to tackle the low levels of qualifications for adults already in the workforce and fund a wide range of support to adults to raise their skills in order to assist them into, and to remain and progress within, employment," the spokesperson added.