Manufacturing earnings grow behind national averages and well below inflation, says RSM

16 august 2022

Commenting on the latest ONS employment statistics for manufacturing, Mike Thornton, national head of manufacturing at RSM UK, said: ‘The latest statistics for Q2 2022 reveal a 3.83 per cent uptick in earnings in comparison to the same period in 2021. However, compared to the national statistics across all UK sectors at 7.75 per cent, manufacturing earnings grew less strongly, highlighting the employment challenges ahead for the industry and indicating that a gap may be building between wage increases and inflation. With manufacturers being more heavily impacted by the pandemic, this is to be expected, and output challenges remain for the industry with the latest manufacturing PMI output falling to the lowest level in 25 months.

‘As the UK braces for a looming recession amidst soaring inflation and the cost-of-living crisis, the upward pressure on salaries means that manufacturers will have to make proactive business decisions to effectively manage their workforce.’

He added: ‘Manufacturing vacancies in July 2022 are plateauing at 93,000, close to an all-time record. However, with the number of people employed in the sector sitting at 2.75 million, even were the sector be able to fill all current vacancies, the total number of people employed would still sit below pre-pandemic levels. This indicates that whilst recruitment remains difficult, uncertainty is impacting upon business confidence and that the focus of recruitment has been on replenishment. However, as manufacturers’ attentions turn to workforce and output levels, further investment is needed in new technology and automation in order to bridge the productivity gap.

‘The current economic outlook and uncertainty surrounding the impact of the Russia-Ukraine crisis, means that sector confidence is lacking as manufacturers weigh up investment and recruitment strategies against increasing salaries and cost-of-living pressures.’

Steve Sweetlove, pay and people partner at RSM UK, said: ‘With salary increases below the national average and an increasingly difficult economic outlook, it will be especially important for the manufacturing sector to holistically review its employment offering. To successfully replenish and retain its skilled workforce, the sector must look beyond the financial perspective. Businesses need to consider and communicate the total package including company values, wellbeing, job satisfaction, progression and job security.’