15 Nov 2022
Commenting on the latest ONS employment statistics for manufacturing, Mike Thornton, national head of manufacturing at RSM UK, said: ‘The latest employment statistics for Q3 2022 reveal manufacturing is falling behind the wider UK economy and faces a bleak winter, despite strong industry recovery post-Covid.’
‘Manufacturing earnings fell sharply in the last quarter by 4%. This leaves the industry in a vulnerable position when it comes to workforce retention given that earnings for the economy as a whole increased by 0.4%. This trend could reflect the reality that manufacturers have faced many cost pressures including the significant combined challenges of input cost inflation and raging energy prices. It is more evidence that margins are being squeezed for manufacturers.
‘Total manufacturing jobs also fell in the quarter by 3.2% to 2.75 million. This is now 10% lower than pre-pandemic, with total jobs at 3.06 million in the second half of 2019. Current vacancies of 86,000 suggest that the sector does not currently need labour to the pre-pandemic extent and manufacturers are cautiously preparing for recession through 2023.
‘Elsewhere the manufacturing PMI for October 2022 fell to 46.2, and, with the exception of the 2020 lockdown, is at the lowest level seen since the 2008 financial crisis. This downward trend is likely to continue throughout 2022 and into 2023 as energy prices and inflation continue to hinder the sector.’
He added: ‘As manufacturers grapple with squeezed margins and limited resource, they need to turn their attention to retaining their existing workforce to ensure the sustainability of their business moving forwards.’
Steve Sweetlove, pay and people partner at RSM UK, said: ‘As inflation and energy prices continue to tighten manufacturers’ business margins and dampen scope for growth in earnings and recruitment, it is inevitable that manufacturers are facing serious retention issues ahead of the wider UK economy. Given the financial pressures they are facing, it is important businesses invest in their existing workforce and focus on enhancing their employee value proposition by communicating with their staff and having meaningful conversations to understand what’s working, and also establish where improvements need to be made.
‘By taking a holistic approach to staff retention and wellbeing, and ensuring strong performance measures are in place to improve staff satisfaction and recognition, manufacturers can take the necessary steps to support their teams, improve productivity and operate more efficiently.’