Engineering and manufacturing SMEs need further support to reduce business costs if they are to create jobs and invest in training, Enginuity has warned following the Budget.
The organisation welcomed measures aimed at reducing employers’ energy costs but said wider financial pressures continue to constrain smaller firms across the sector.
Its latest Snapshot Survey found that 80% of engineering and manufacturing SMEs faced pressure to increase prices because of rising labour and raw material costs. The number reporting similar pressure from energy costs had more than doubled since the previous survey.
Enginuity also highlighted a gap between the need to improve young people’s access to employment and the capacity of smaller employers to provide opportunities. Around two-thirds of engineering and manufacturing SMEs surveyed said they were operating below full capacity.
The organisation is calling for policymakers to consider targeted financial incentives that encourage employers to invest in skills and training.
Energy Support Welcomed, But Wider Pressures Remain
Ann Watson MBE, CEO of Enginuity Group, said:
“The Chancellor was correct to recognise the significant pressures facing businesses. Our most recent Snapshot Survey revealed that 80% of engineering and manufacturing SMEs faced pressure to raise prices due to increasing labour and raw material costs.
“The number of SMEs in the sector under pressure to raise prices due to energy costs had also more than doubled since the previous survey. The Chancellor’s actions to reduce energy costs facing employers is therefore certainly a welcome step. However, greater emphasis must now be placed on reducing the wider costs SMEs face, so they are able to create more jobs and invest increasing amounts in training the next generation.
“Over the coming months, we look forward to greater clarity on the Government’s commitment to tackling youth unemployment. Right across the UK, many young people are struggling to find pathways into work. Meanwhile, around two-thirds of engineering and manufacturing SMEs say they are not running at full capacity.
“If Alan Milburn’s final recommendations are to create more workplace opportunities for young people, government policy must also support SMEs to offer more workplace opportunities. Policymakers should explore targeted financial incentives to directly encourage greater employer investment in skills and training, offsetting those costs that currently hold employers back.”
Connecting Skills Ambitions With SME Investment
Enginuity’s response places smaller employers at the centre of the debate over how to expand routes into work.
Its position is that ambitions to tackle youth unemployment must be accompanied by practical support for businesses expected to recruit and train new entrants. While lower energy costs could provide some relief, the organisation argues that addressing the broader cost of employment and training will be important to enabling further investment.
Source: Enginuity
