Abstract: The present paper considers the challenges which Industry 4.0 imposes on business and its young engineering pool. On the basis of the findings of two focus groups, independently held in Bulgaria and Poland, a skills mismatch between industry demands and university education supply in the area of Mechanical Engineering and Mechatronics is identified, which turns out to be one of the main obstacles to creative thinking and innovation. According to industry gap between engineering skills offered and those searched by employers is related to both hard and soft skills. Young engineers in both countries find it difficult to apply the academic knowledge acquired into a real-life business setting, especially in terms of analyzing an engineering problem, finding the best possible solution, applying critical and creative thinking, leading a multidisciplinary team, etc. In order to respond to the above engineering skills mismatch, a new educational model for improving the qualification of engineering graduates is proposed. It is based on work-based learning and apprenticeship, It is the first attempt to introduce dual studies, also called cooperative studies, at tertiary level in Bulgaria and Poland – an approach which has proved to be very successful for both higher education and business in some of the developed countries worldwide.