UK engineering labour market – squeezed to the limits

The UK engineering sector finds itself at a critical juncture, pinched between rising market needs and an acute skills crisis

Rock meets hard place. The UK engineering sector has reached a tipping point, as it simultaneously grapples with an acute skills shortage and is presented with unprecedented demand for innovation and sustainability. Engineers are now expected to tackle urgent climate goals, adopt cutting-edge technologies, expand the globe’s manufacturing output and address crucial resource challenges – all at once and with insufficient people for the task.

When the numbers don’t add up

As tough as the current labour market is, key demographics point to much tougher times to come; 20% of the UK’s current engineering workforce will retire over the next five years, taking a vast pool of knowledge and experience with them. At the same time, it’s estimated that a million more engineers will be needed by 2030 and over 1.9 million new STEM professionals by 2035 just to meet current demand, plus an extra 59,000 new engineers will be needed annually to meet the expanding needs of the green economy.

On top of these daunting numbers, engineering businesses must also adapt to an evolving labour landscape. Workers now prioritise flexibility, career development and meaningful work, and businesses that do not adapt may face increasing attrition rates. For some organisations, this may mean totally reshaping their approach to workforce development, as robust reskilling and upskilling programmes, fostering inclusive workplace cultures, and adopting forward-thinking recruitment strategies are just some of the initiatives that are now essential to attract and keep top talent.

What lies ahead for the UK engineering sector?

The challenge matrix is broad and deep.

• Intensification of competition for top talent: Employers will face significant challenges as they compete to attract and retain skilled engineers, both domestically and internationally.
• Rising attrition rates: Businesses that do not adapt to workers’ demands for flexibility, professional growth and improved work-life balance may face increased employee turnover.
• Increased salaries: Top engineering talent will continue to be able to command premium salaries. The impact of this may trickle down, forcing wage increases across the sector as employers rush to remain competitive.
• Heightened overseas competition: International firms will continue to attract UK talent, leveraging higher salaries, remote work opportunities or relocation incentives.
• AI’s mixed impact: While advances in artificial intelligence promise long-term efficiencies in hiring, its deeper integration may also disrupt traditional recruitment processes and exacerbate skill mismatches.

To succeed in the talent stakes in 2025 and beyond, engineering organisations must adopt a strategic approach that matches a detailed and closely co-ordinated recruitment, retention and reskilling plan to the long-term objectives of the business. Playing catch-up will not be good enough. Engineering businesses must get ahead of the skills gap by exploring and exploiting every talent avenue.

10 steps to bridge the engineering skills gap

A ‘skills-based’ hiring programme can help to close the gaps in your organisation’s workforce plan, create new opportunities for reskilling loyal workers and support employee retention.

Step 1 – Conduct a ‘skills audit’

Start by identifying the expertise needed for current operations and future growth. Analyse surveys, interviews and performance reviews to assess employee abilities, uncover skills gaps and pinpoint areas for development.

• Key benefits: Provides a roadmap for hiring. Indicates employees most suitable for reskilling.

Step 2 – Provide training for managers

Provide your managers with the tools and techniques to identify employee potential and offer opportunities for advancement. Train them to better assess the skills and capabilities of potential candidates during the recruitment process.

• Key benefits: Supports retention. Reduces ‘wastage’ in the hiring process.

Step 3 – Enhance your Employer Value Proposition

Ensure that your EVP is robust, aligns with your organisation’s values and highlights opportunities for growth and development. Clearly demonstrate your Diversity, Equity, Inclusion and Belonging (DEIB) policies to showcase your commitment to creating an inclusive workplace.

• Key benefits: Positions your business as a ‘career destination’ for aspirational talent.

Step 4 – Present your job offer from the candidate’s perspective

Outline the benefits of the position and emphasise potential advancements within the organisation. Highlight how the role could align with the candidate’s career aspirations and long-term goals.

• Key benefits: Widens the talent pool. Reduces the number of ‘off target’ applications.

Step 5 – Give workers what they want

Ensure your organisation answers the question of what today’s workers want. Today’s workers don’t want to just survive at work, they want to thrive.

• Key benefits: Widens the talent pool. Supports retention. Supports productivity.

Step 6 – Search for skills, not experience

Work experience may not be a perfect indicator of a candidate’s capabilities. Instead of focusing on experience alone, prioritise candidates who have the specific abilities needed to address your organisation’s skill gaps.

• Key benefits: Sharpens your talent search. Can deliver a more diverse candidate pool.

 Step 7 – Expand your talent pool

The best candidates for your needs may not be found via mainstream search. Consider applicants from diverse backgrounds and experiences, including seasoned workers who may offer valuable skills gained over a long career.

• Key benefits: Supports culture and performance. Gives access to valuable, transferable skills.

Step 8 – Reconsider your reliance on recruitment technology

AI can efficiently screen CVs and assess technical skills, but the emotional element of candidate evaluation remains crucial. Balancing technical and human input helps identify the most suitable candidates for your team.

• Key benefits: Reduces technical bias. Allows ‘talent at the margins’ to shine through.

Step 9 – Fine-tune your onboarding processes

Effective onboarding of new employees is vital, especially for early-career professionals who are transitioning into the workforce for the first time. Tailoring your onboarding processes to meet their needs can significantly impact their performance and long-term engagement with your organisation.

• Key benefits: Supports retention. Enhances performance. Reduces time to effectiveness.

Step 10 – Take a long-term approach

Supporting employees for the long term is crucial. Investing in regular training and reskilling opportunities is essential for maintaining and enhancing employee capabilities, which in turn supports retention and organisational growth.Key benefits: Maintains morale. Enhances productivity and performance.

Manpower Engineering – putting theory into practice

In an industry with a stark skills shortage, engineering businesses need a partner who knows the market inside out and can access the talent they need at speed. Whether you need one engineer or a one-stop-shop for comprehensive workforce solutions, Manpower Engineering is on hand to help your business.

Our services:

• Temporary resourcing
• Temp-to-perm
• Permanent placements
• Contract.

Across key engineering sectors:

• Defence and aerospace
• Automotive
• Built environment
• Manufacturing
• Renewables.

Get the Manpower Engineering 2025 Skills and Talent Trends Report

Stay ahead of the competition. Overcome the talent shortage. Understand what’s happening now and for the future in UK engineering.