This research paper explores the complex relationship between automation and labour market dynamics, focusing particularly on skill mismatch and unemployment. With rapid advancements in arificial intelligence (AI), robotics and machine learning, economies are undergoing transformative changes. While automation drives productivity and innovation, it also poses significant challenges for the workforce, including displacement of routine jobs and widening skill gaps. This paper investigates the multifaceted impact of automation on different sectors with a particular focus on how skill mismatch contributes to structural unemployment. Through a mixed method approach involving literature review and analysis of recent labour statistics, the study aims to offer actionable policy recommendations.