UK Industry at Risk: Labour Costs and Skills Shortages Threaten Manufacturing Growth
UK industry is facing mounting pressure, with soaring labour costs and persistent skills shortages now eclipsing even energy expenses as the sector’s biggest hurdles. That’s according to a newly released report from Enginuity, the UK’s specialist skills body for engineering and manufacturing.
The findings paint a stark picture of how these twin challenges are dampening momentum in the manufacturing sector, particularly for small and medium-sized enterprises (SMEs).
Based on interviews with 135 businesses across the country, the report uncovers deep frustration and stalled growth.
Recruitment appears to be one of the hardest-hit areas. A staggering 80% of companies reported struggling to find appropriately skilled workers in the past six months.
Only a quarter of firms surveyed said they remained unaffected by the talent crunch. Alarmingly, 41% admitted they’ve had to pass up new business opportunities due to the lack of available skilled staff.
Still, there’s cautious optimism in the air.
Despite these pressures, many employers are holding onto hope for the future. The Government’s recent Industrial Strategy, a long-term plan aimed at boosting economic growth, has given some cause for encouragement.
Many business leaders view it as a step in the right direction, offering some much-needed clarity and direction for UK industry.
Encouragingly, 80% of SMEs surveyed expect their workforce numbers to remain stable or even grow over the next six months. And when it comes to training, 31% are planning to increase their investment in staff development over the next year.
“This report is a striking confirmation of how severely the skills system is failing the majority of engineering and manufacturing SMEs, stifling their ability to grow.
Despite significant increases to employment costs, SMEs remain determined to keep investing in training,” said Poppy Bramford, Policy Manager at Enginuity.
“Whilst the Government wants to see increases to employer investment in skills, barriers keep SMEs locked out of the skills system that would enable them to do so.
For SMEs to realise the ambitions of the UK Government on economic growth, the skills landscape must move beyond policy chop and change by injecting longevity and SME engagement into policy creation.”
The message from UK manufacturers is clear: they’re ready to grow, but the system must evolve to support them. Until then, labour costs and talent shortages will continue to drag down one of the country’s most vital industries.
