Manufacturers' outlook for the labour market in 2012

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Today's labour market statistics do not make particularly comforting reading. One key measure, the ILO unemployment rate, edged up to 8.4%. Unfortunately, we expect that figure to continue to rise: averaging out at around 8.6% over the course of 2012.

The economic uncertainty resulting from the Eurozone crisis that overshadowed much of the second half of 2011 is likely to affect hiring decisions in the year ahead. And while positive balances of manufacturers intend to take on both temporary and permanent workers in 2012, this is highly dependent on the sector.

Some sectors, particularly Transport (which is more exposed than most to emerging markets), are more positive about taking on new employees in the months ahead, whereas a balance of Rubber and Plastics manufacturers expects to reduce headcounts of both temporary and permanent workers.

In addition, while companies often report positive recruitment intentions, these can sometimes be frustrated by skills shortages, which are a long-term issue for the sector.

The labour market statistics also showed that the number of working days lost to labour disputes was its highest level since July 1989. Although this number was skewed by the large public sector strikes on 30th November 2011, deterioration in workplace relations has been raised as a concern by some manufacturers.

Similarly, after a couple of years of pay restraint, companies are concerned that they will face significant pressure on pay, which – at a time when materials and other input costs remain elevated – could put additional pressure on margins and profitability.

So far manufacturers and their employees have worked together to ensure good workplace relations. During the downturn this resulted in fewer job losses than have previously been seen in recessions. Reflecting this, many manufacturers see maintaining good lines of communication with employees as a crucial activity in the year ahead.


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