🤯 Cost of doing business, a headache for the Low Pay Commission?

The Low Pay Commission’s call for evidence on the NLW and other minimum wage rates is *usually* straightforward for manufacturers. Pay is above average, so any marginal increases in rates have a minimal impact on them.

In today’s issue, we discuss why the current economic climate has added an additional layer of complexity and difficulty to the calculation. We also unpick the UK Digital Strategy which launched two weeks ago, as well as a look back at International Women in Engineering Day.

Things to look out for this week: Our halftime review of 2022 in partnership with PwC, our take on all things apprenticeships in skills in The Guardian, and our appearance at the Chartered Institute for Housing Conference!

The LPC’s central estimate for next year’s NLW rate is £10.32 – an increase of 8.6% on 2022. Manufacturers are seeking to respond to their employees’ concerns over the cost of living – as well as ensuring they are attracting and retaining talent in an extremely tight labour market – by increasing pay and other benefits.

This will help to reassure businesses that the increases will be sustainable and the impact on pay differentials across the workforce will be manageable, especially at a time when other business costs continue to increase and firms plan for their next pay settlements.

Manufacturers also typically pay significantly above the minimum rates for young people and apprentices, preferring instead to pay competitive wages to retain young talent and highlighting the status of manufacturing as a high-skilled, high-paid sector in which to develop a career.

We look forward to seeing the recommendations of the consultation.

The adoption of new digital technologies has never been so important for manufacturers - new digital technologies are enabling manufacturers to become more sustainable, as well as future-proof their companies against any upcoming challenges and competition.

It is a very comprehensive, and complex strategy, but is also full of signposting - which gives the impression that rather than speaking directly to businesses, this acts more as a map for policymakers instead?

But in good news, a huge part of the strategy covers skills, an area important to the manufacturing sector - which is fully focused on addressing skills shortages, the need to upskill and train people and also attract talent from abroad in order to innovate, decarbonise and grow their business.

This strategy also brings together Government work around public procurement, digital infrastructure and cyber security – some practical solutions and guidance which can help manufacturers to make a progress in digitisation. Another big plus is it shows that ‘digital’ (yes that very broad term) is not only a priority for DCMS, it requires the cooperation of different departments cross-government.

Businesses need incentives to invest in new uncertain projects, and the R&D tax credit is one pathway through which they can do this. However, we believe extending tax credit onto capital expenditure into green technologies would be a game-changer for manufacturers - driving the incentives to innovate and supporting greater sustainability.

Another key area that is crucial for the manufacturing sector and the wider economy is digital adoption. Digital adoption needs to involve more SMEs otherwise we will have a growing gap between fast-growing firms and small just about-managing ones.

Technologies such as additive manufacturing, IoTs or AI are mostly mature, so our focus must turn to ensure the better take-up of these amongst SMEs. Whilst Help to Grow is trying to address some of this, we need to diversify the offering into supply chain management software and other manufacturing software. Made Smarter is doing a great job in helping SMEs with digital adoption, and a national rollout of this should be considered within the implementation of the UK Digital Strategy.

It’s great to see this comprehensive overview of the schemes, plans and strategies available. We look forward to seeing the new developments around regulation, in particular ensuring they are business-friendly. But all in all, a good step in the right direction.

It was International Women in Engineering Day last week, and we celebrated the incredible contribution women make to our sector.

But we have some way to go in our sector to achieve better presentation, currently, only 16.5% of all engineers are female - that’s where role models can be vital. Check out just some of the amazing women at our Technology Training Centre in Birmingham:

We were also delighted to support the work of CMI in their publication of #EverydayEconomy - a call to action to create genuine inclusion that will support economic recovery and a better future. Make UK member G&B Electronics MD Laura Brown, shared her experience in how they are working for inclusivity in her business.

Ps. National Manufacturing Day on 7th July is a great opportunity for manufacturers to showcase the diversity and role different people, from different backgrounds play in making the manufacturers sector a forward-thinking, versatile sector. So make sure you get down to your local manufacturer to learn all about the sector as well as the amazing people working in it.

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Copy editor: Bhavina Bharkhada, Make UK Head of Policy & Campaigns