UK food manufacturers facing ‘chronic labour shortages’ but innovation still a priority, says FDF report

Most UK food manufacturers continue to be affected by “chronic labour shortages”, but are still committed to innovation according to new analysis from the Food and Drink Federation (FDF).

The association’s latest state of the industry report for Q2 2023 reveals nearly 60% of food and drink manufacturers are seeing vacancy rates of up to 5%.

Mid-sized businesses are experiencing the bulk of shortages in the sector, with around 50% reporting vacancies of up to 10% which is nearly three times the national average.

Labour shortages so far are estimated to have cost food manufacturing businesses around £1.4 billion since July 2022 due to reduced production. Vacancies in the last quarter alone have cost the industry £192 million.

Some key roles which are struggling to be filled include project engineers, scientists, lab technologists, plant engineering technicians, and production operatives, according to the report.

Despite the ongoing pressure of shortages, innovation was still a top focus for over half of manufacturers, with 41% saying they are working to adapt or simplify their supply chains and restructure operations to maintain competitiveness.

While improving energy efficiency didn’t make the list of the top three priorities for the first time since Q2 2022, the FDF suggests this could be because most manufacturers have already started implementing changes to make their production methods more energy efficient.

Nearly half of manufacturers also reported they plan to boost capital investment expenditure within the next year. Some 64% of manufacturers also said they believed their business would see growth over the next 12 months.

In advance of the Government response to the Independent Review into Labour Shortages in the Food Supply Chain, due to be published in the autumn, the FDF has called for greater collaboration with the food industry and the education sector to tackle the problem.

FDF Director for Growth, Balwinder Dhoot, said in a statement: “Significant labour shortages have cost businesses £1.4bn over the last year, with companies being forced to leave vacancies unfilled and reduce production – all of which contributes to rising wage bills, higher prices and stifles growth, which is vital for a strong economy.

“Investment is essential if we are to build a sustainable and resilient food supply chain which supports the economy and feeds the nation. Our members are unable to expand their operations, principally because they haven’t got the staff.

“We need Government to work with industry to implement all ten recommendations in the Independent Review into Labour Shortages and to deliver the Prime Minister’s commitment to grow the economy. Our members are really clear that the Government’s plan to extend ‘not for EU’ product labelling on a UK-wide basis will hamper growth, hitting investment, exports and jobs while increasing consumer prices and restricting the choice of products, so would urge them to reconsider their approach.”