The Cost of Labour in 2023

The Metal Magazine: The Cost of Labour in 2023, Mike Bolton

In the last few years, with the CoVID-19 pandemic being followed by Brexit, inflation and a cost of living crisis in the UK, the labour market has changed considerably and businesses need to keep up with the times to retain their staff and attract the best talent.

As a recruiter specialising in the metal and engineering sectors, I’ve noticed that the businesses and organisations that we deal with are having to undergo major changes to their salary structures, benefits packages and skills matrices in order to keep up with the changing requirements of the UK workforce.

As finances tighten, people at all levels in a business are reassessing what’s important to them and what they want from a job or career, and businesses need to keep up with those demands or risk losing their best staff.

People might want to work closer to home to reduce their travel costs, or work more flexible hours to reduce costs associated with childcare. People who work for businesses that offer low base salaries with bonus schemes might now prefer the security of a fixed salary to make sure that they can continue to pay their bills, particularly as businesses face challenges and offer smaller bonuses than in previous years. People will even consider changing industry sectors completely in search of opportunities to earn more.

In our recruitment business, we’ve spoken to a lot of people recently who haven’t necessarily wanted to leave the business that they work for, but they’ve felt like they had to so that they can find better salaries, shorter commute times or better chances of progression.

Rising labour costs

The business owners and senior managers that we’ve spoken to, who perhaps haven’t needed to recruit since before this cost of living crisis, are often shocked when they see the salary that they now need to pay people to fill positions.

Businesses that are trying to recruit within a strict salary bracket find themselves struggling to find people at the same salary than in previous years.

We’ve put together a report detailing the salary benchmarks for various positions in 2023. If you’d like to see a copy of that report, send me an email: mike@comtongroup.com

The companies that are coping the best and retaining their staff are those that have reviewed and increased their salary offerings, as well as those that look beyond the traditional talent pools to seek quality candidates.

Attracting the right talent

There is a skill shortage and an ageing workforce in the metal industry. Most people in senior positions will agree that more could be done to attract a younger, better-educated workforce.

Many businesses, we find, have a very narrow expectation of what they are looking for in a candidate. More than wanting to find someone with general ‘metals’ or ‘engineering’ experience, for example, they might not even entertain interviewing candidates who don’t have experience with a niche type of product, a certain type of metal or a particular piece of software or equipment.

This mentality, in my opinion, needs to change.

The industry has a duty to bring in youth and attract talent from a wider pool. There can’t be many young adults that leave school or higher education and are excited about an opportunity to work in the metal stockholding sector, but having worked in and around that industry for over 10 years I know that there are lots of fantastic organisations with a global presence and really great opportunities.

The engineering sector has historically done a better job of appealing to school leavers and university graduates, but an abundance of prospective employers means that attracting the best talent is difficult for smaller organisations, and the smaller, more niche engineering firms need to do more to stand out from the crowd.

Rather than targeting prospective candidates that have very specific experience in the sector a business operates in, businesses can look more widely to find people who are generally keen and capable and then teach them the skills they need to fit into that niche sector.

The current outlook seems to be that skill is more important than attitude, but I strongly believe that it should be the other way around. People can be taught. Everyone who is currently in the industry was, at some point, a novice themselves, and had to learn everything they now know.

There are lots of exceptional candidates who are keen to learn but are never given the opportunity to work in the industry because they don’t have the experience.

From a business perspective, part of the reasoning behind this mentality could be that they don’t have the capacity to be able to train people, as they are already competing with staff shortages, the energy crisis and the increasing cost of materials. But for their business to survive, the senior management need to scrutinise their current recruitment practices, as well as think carefully about what they can do to retain the skilled staff that they have.

Recruiters are always on the lookout for quality candidates, and if your business looks after its staff well, pays them competitively and provides a good working culture, they won’t be tempted to leave.

Suggestions for success

My top 5 tips for businesses operating in the metal or engineering sectors in 2023 would be summarised as follows:

  1. Assess your current salary offerings and remuneration packages to ensure that you are, wherever possible, paying your employees a competitive salary. People at all levels are feeling the pinch and you need to do what you can to support your team and keep them focused on the goal at hand. Conduct market research to find out what the competitive salaries and packages are for each role.
  2. Develop structured pay scales with clear objectives so that your team know what they need to do and how long it will take them to achieve an incremental increase in their pay. The more transparent you are with an employee’s progression prospects, the better, and the less likely they will be to consider looking elsewhere. Employees are more likely to stay with a company if they see a clear path for career growth.
  3. Consider the culture of the working environment you’ve created and look at what you can do to improve buy-in from your team. Offer flexible working or the ability to work from home in roles where that’s possible, to reduce the stresses and costs of travel and childcare. For roles that are hands-on and require people to be on-site, look at their working environment and invest in improving their experience. Promote teamwork, reward achievements, seek feedback and offer a decent work-life balance.
  4. When recruiting, consider widening your sights and finding the right people with the right attitude rather than just those with very specific past experiences. There are countless examples of people who came from outside the industry and have succeeded in their roles because someone has taken the time and money to invest in their education and coach them to become experts in their new field. The experience and fresh perspective that people can bring might just improve your business.
  5. Think about what you can do to attract new talent into your niche. Invite local schools to bring children down for a look around on a school trip. Form relationships with colleges and universities to encourage graduates to apply. Consider offering your organisation as somewhere where students can work during a placement year, or explore apprenticeship opportunities if you don’t already have apprentices.

In conclusion, businesses in the metal and engineering sectors must adapt to the changing demands of employees if they wish to retain their best staff and attract top talent in increasingly competitive job markets. Reviewing salary structures, improving working conditions, providing career growth opportunities, and recruitment practices are all areas where companies can make a positive impact.

With the right decisions and approaches, metal and engineering firms can future-proof their workforces, fill critical skills gaps, embrace new ways of working and keep staff turnover low. By putting people first, these businesses will build a foundation for success and continued growth in highly competitive markets.

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