Manufacturing and engineering employers are unable to reliably attract the skills they need to fill many positions, and this is limiting economic growth and prosperity. That’s why it’s vital to appeal to a broader pool of talent to make manufacturing and engineering more inclusive, argues Poppy Bramford, senior policy manager at national skills charity Enginuity.
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SMEs are the lifeblood of UK manufacturing and more than 90% of manufacturing businesses in the UK are SMEs. Advanced manufacturing simply does not exist without the SME supply chain.
With 84% of manufacturing jobs sitting outside of London and the South East, manufacturing is a crucial sector for increasing prosperity in the UK as a whole and for addressing inequalities within and between regions. The sector accounts for 9% of employment in the UK and 13% of turnover, despite only accounting for 5% of businesses
We truly punch above our weight, with manufacturing contributing 217 billion in output to the economy last year and supporting 2.6 million jobs. We’re 45% of the UK’s total exports and 47% of UK R&D.
But employers in the sector are not able to reliably attract the skills they need to fill many positions, which limits economic growth and prosperity
At national level, manufacturing has the third highest skills shortage vacancy density (a vacancy which attracts applicants but none with the right skills). The skills shortage vacancy density now sits at 42% of all vacancies (up from 29% in 2017).
At the same time, there have been worrying falls in both public and private investment in training. Employer investment in training has fallen, with the UK’s training spend per employee diminishing to 26% less in real terms since 2005. At the same time, public funding for adult skills has fallen by 31% in real terms since 2003
Now more than ever we need a cultural shift in UK public and private investment in training if we are to meet the government’s economic growth ambitions. However, significant head winds, particularly increases to the employment cost base announced in the autumn budget, will lessen SMEs ability to invest in capital and workforce development over the next 12 months.
The Autumn Budget was the second largest post-war tax raising budget. It saw increases to employer National Insurance Contributions (NICs) of 1.2%, a drop in the threshold at which employers start paying NICs.
Businesses - especially SMEs - are now looking inwards at their balance sheets and to bottom line to manage costs, instead of looking outwards to identify growth opportunities.
Last month, Enginuity surveyed SME employers in the manufacturing and engineering sectors to better understand the impact these changes. Unsurprisingly, 97.6% said they expect their employment costs to increase. The data we gathered suggests that as a result, SME hiring intentions will cool and training budgets will take a hit.
Despite the challenges, employers know that investment in skills is critical to our sector; a much-needed investment in the future workforce and a fundamental part of workforce development.
We know that around one third of average annual UK productivity growth between 2001 and 2019 is attributable to an expansion of skills available in the workforce. Skills are crucial to achieving our ambitious targets for economic growth.
Business and government have a joint responsibility to ensure we have an adequately skilled workforce both now and in the future. To unlock much needed economic growth, together we must:
Government has plenty of work to do; incentivising investment in skills should be a priority and establishing stability in the skills-ecosystem is a must.
At the same time, businesses have to get young people excited about careers in engineering and manufacturing. We need to engage young people, ignite their passion and make sure they know that there is a role for everyone in manufacturing and engineering. Only 36% of young people said they would consider a career in manufacturing, with young women far less likely to consider it at all, (just 18%, compared to 54% of young men).
According to Skills Cast, who conducted analysis on inclusivity ranked by industry, manufacturing is the sector least inclusive sector in the UK. Our workforces should mirror our communities, and firms that haven’t started to look at how they diversify their recruitment and build inclusive workplaces to retain diverse talent are already behind the curve.
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Enginuity is a charity dedicated to helping employers in the manufacturing and engineering sectors to close the skills gap. We combine a unique approach to sector data with a deep understanding of skills challenges, to help employers ensure that the sector has a highly skilled, globally competitive workforce they need, now and in the future. We champion the voice of SMEs in manufacturing and engineering to government. We make sure government takes account of SMEs when it formulates regulation for the skills ecosystem or develops skills policy.
