ONS figures spell problems for manufacturing pay

National head of manufacturing for RSM UK Mike Thornton said that earnings in the sector rose by 3.83% in the second quarter of the year. 

This compared with a 7.75% average over all UK industry sectors – more than twice the figure for manufacturing.

Thornton said these highlighted particular challenges for the sector and suggested that “a gap may be building between wage increases and inflation”.

Given that manufacturers had been more heavily impacted by the pandemic, the situation was predictable. Additionally, said Thornton, the latest manufacturing PMI output had fallen to its lowest level in more than two years. 

He warned: “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.

Manufacturing vacancies in July 2022 topped 93,000, close to record levels.

“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,” added Thornton, advising that 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." 

Pay and people partner at RSM UK Steve Sweetlove commented that, with salary increases below the national average and an increasingly difficult economic outlook, the sector would need to "look beyond the financial perspective" in order to replenish and retain its skilled workforce.