With the Labour Government now in power following the General Election on 4th July 2024, business leaders should now be better able to consider the impact on their operations, particularly in hiring and talent management.
It’s been a tough economic landscape of late, and by analysing what’s coming up, your business will be best positioned to take advantage of the opportunities which lie ahead.
So, how will the new Labour government under Keir Starmer impact and influence your business decisions?
Economic policies and their impact on business confidence
Before digging into the details of potential policies, we need to address the big overarching issue: the economic landscape. British businesses have been operating in a difficult climate, with high interest rates, high inflation and lingering issues from the socio-political climate such as Brexit and the Ukraine war. This has made it difficult to do much more than holdfast. So, first we need to consider how the new Government intends to tackle this backdrop.
The new Government intends to introduce a series of economic policies designed to foster business confidence and stimulate hiring. One of the key measures outlined is the capping of corporation tax at 25%, coupled with enhanced investment allowances. These changes are aimed at creating a stable tax environment, encouraging businesses to invest and expand.
Labour’s commitment to infrastructure development, digital connectivity, and green initiatives should drive economic growth. The establishment of a National Wealth Fund is set to support transformative projects in ports, gigafactories, and carbon capture technology. For engineering and manufacturing sectors, this means increased opportunities for involvement in cutting-edge projects, potentially leading to a surge in demand for your business services.
With anticipated public investment in green technology and infrastructure, along with substantial funding for renewable energy projects, such as wind and solar power, and the development of a more resilient and modern infrastructure network, it should be a good time for our sectors. Such investments are expected to create numerous job opportunities requiring a skilled workforce to support these ambitious projects.
Importantly, you’ll need to develop confidence in making strategic hiring decisions after a year characterised by hiring freezes. Of course, election promises don’t always materialise, but historically, the time ‘post-landslide election victory’ has traditionally been one of stability and growth.
Regulatory changes and new employment laws
Significant regulatory and employment law changes are on the horizon with the new Government. You’ll need proactive leaders driven to hire fairly, with an eye on future government policies. Businesses should prepare for key reforms, including granting employees unfair dismissal rights from day one of employment, and restricting ‘fire and rehire’ practices. Changes to redundancy consultation thresholds are also expected.
Labour’s commitment to banning exploitative zero-hours contracts, enforcing predictable scheduling, and introducing flexible working by default might mean significant changes at the general worker level in engineering and manufacturing, particularly within factories and throughout the supply chain. These changes are designed to offer better job security and work-life balance for employees, but they will also require businesses to adopt more robust compliance measures.
There are additional employment law changes being spoken about. These reforms aim to create a more equitable workplace but may also lead to increased operational costs and administrative demands. The trick is to be ahead of the game, understand what’s coming, and be an employer of choice at all levels.
Immigration and the impact on the talent pool
Immigration was a headline for every party at the election, and there’s no escaping its impact on businesses, particularly in the wake of Brexit.
The Labour Government’s approach to immigration is set to significantly impact the talent pool, particularly concerning skills shortages. With a focus on reducing net migration and decreasing dependency on overseas workers, businesses may face stricter rules for hiring international talent. The points-based immigration system will be reformed to prioritise domestic skills development and prevent workplace exploitation.
This shift could be very tough in sectors like engineering and manufacturing where skills shortages are a huge problem. Labour’s emphasis on improving home-grown skills through enhanced training programmes sounds good in theory, but it will take time to materialise.
With the proposed investment in industries that will build demand for engineering and manufacturing, it could be problematic. Business leaders must be ahead of the curve, building the talent pools and relationships that enhance the opportunity for supported talent pipelining.
Employers should invest in robust training and development programmes to cultivate talent internally. This will help mitigate the impact of reduced access to international workers.
Businesses may also need to rethink their recruitment strategies to attract and retain domestic talent. This could involve partnerships with educational institutions to create tailored training programmes and offering apprenticeships, especially degree apprenticeships and T Levels. Additionally, partnering with us can help you build a more resilient and adaptable workforce that is less dependent on international recruitment, but can access it when needed.
Sector-specific impacts on engineering and manufacturing
The engineering and manufacturing sectors stand to benefit from the Government’s targeted investments in infrastructure, green energy, and technology. Labour’s industrial strategy includes creating Great British Energy, the renationalisation of railways, accelerated transition to electric vehicles, and development of gigafactories are all initiatives that will drive demand for skilled engineers and manufacturing professionals. To thrive in this environment, companies will need to prioritise training and retaining top talent.
Labour’s commitment to green energy and sustainability will also require businesses to innovate and adopt new technologies. The renewed focus on sustainability will not only drive demand for new products and services but also create opportunities for businesses to differentiate themselves through their environmental credentials. When you consider that within a typical manufacturing environment, the majority of carbon output comes from your supply chain, your environmental credentials showing how you’ve reduced this and been pro-active, will be critical.
Again, engineering and manufacturing businesses will need to focus on workforce development and training to ensure they have the necessary expertise to capitalise on these opportunities. A close partnership with industry-experts in leadership and management recruitment will undoubtedly be of long term benefit.
It’s time to move forward
The new Government’s policies present both opportunities and challenges for businesses in manufacturing and engineering. It’s a time to be proactive as business leaders, ensuring you have the right talent leading your organisation that will maximise on the opportunities and overcome the hurdles. Staying informed and agile will be key to making strategic hiring decisions and maintaining a competitive edge.
There are opportunities for growth and innovation and we’re here to help your business thrive.
For your tailored recruitment solutions, contact First Executive Recruitment on 0161 359 3111. Let us help you find and retain the top talent your business needs to thrive.
Our 100% success in placing transformative leaders and management within SME manufacturers underscores why you need us to secure your next hire.
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