Enginuity’s SME Snapshot Report: Employment costs holding back growth for SMEs

In our mission to help employers in the engineering and manufacturing sector close the skills gap, Enginuity has developed an SME Snapshot. The report aims to help better understand how micro, small and medium enterprises (SMEs) are responding to current economic and policy developments.

The report offers insights for policymakers and our SME community on their priorities, pressures and plans, as well as how to support the role SMEs play in driving the UK’s next chapter of growth.

Capturing insight from 135 manufacturing and engineering SMEs from across the UK, representing 6,500 employees and £1.1 billion worth of sales, the report shows that high employment costs are now outstripping energy costs as the most cited source of pressure to raise prices, creating inflationary headwinds and threatening the competitiveness of the UK labour market.

The employers that engaged in the research remain optimistic about the year ahead, even whilst operating in a labour market they find challenging. The recent Industrial Strategy has provided a strategic 10-year vision for business and demonstrates the Government’s commitment to kickstarting economic growth. Awareness of the strategy is high amongst the employers that engaged in the research, providing an opportunity for government to focus on helping SMEs to thrive.

To unlock public and private sector investment in skills Enginuity is calling on the Government to focus on replacing fragmentation with cohesion, complexity with clarity. To realise employer commitment, SMEs need strong institutional arrangements, cultural esteem for vocational learning, and long-term policy continuity. 

The report’s author, Poppy Bramford, Enginuity’s Policy Manager, comments: “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. 

“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.”

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