Make UK’s Q3 HR Bulletin, developed in partnership with MHR

Skills shortages continue to constrain growth, pay pressures haven’t gone away, tribunal risks remain elevated, and workforce technology is playing an increasingly important role in both productivity and compliance.

Viewed individually, none of these challenges are new. Together, however, they point to a growing need for better workforce visibility and more informed decision-making. Whether organisations are trying to recruit specialist talent, manage labour costs, improve productivity or navigate an evolving regulatory landscape, success increasingly depends on having a clear understanding of what’s happening across the workforce.

Manufacturers are still hiring, but finding the right skills remains difficult

Recruitment activity remains high, with 92% of manufacturers attempting to hire during the quarter. More encouragingly, 28% reported filling every vacancy they advertised, suggesting that employers can still attract talent despite a competitive labour market. Yet the underlying challenge hasn’t changed; more than half of manufacturers (57%) continue to cite a lack of candidates with the right technical skills as their biggest recruitment barrier.

For many HR leaders, this reinforces a shift that’s already underway. Skills shortages are becoming less of a recruitment issue and more of a workforce planning challenge. When technical skills remain difficult to source externally, organisations need a clearer understanding of where capability gaps exist, which roles present the greatest operational risk and how internal talent can be developed to meet future demand.

Rather than relying solely on recruitment to solve workforce shortages, many manufacturers are placing greater emphasis on succession planning, skills development and workforce data to better understand future capability needs.

The rise in pay settlements reflects ongoing competition for talent

Average pay settlements rose to 4% during Q3, the highest level reported in more than a year. Among manufacturers that agreed a settlement, 4% was also the most common outcome, underlining how widely organisations continue to feel pressure to remain competitive in attracting and retaining talent.

For employers already balancing labour costs against profitability, that creates a difficult challenge. While pay remains an important part of the employee proposition, manufacturers are increasingly looking beyond salary to understand what drives retention and engagement within their workforce.

This is where workforce insight becomes particularly valuable. Understanding patterns around turnover, absence, overtime and employee development helps organisations make more informed decisions about where investment is likely to have the greatest impact. In a labour market where critical skills remain scarce, evidence-based workforce decisions can be just as important as reward strategy.

Compliance and employee relations remain firmly on the agenda

The research found that 13.5% of manufacturers have been notified of Employment Tribunal claims. While only 11.5% reported claims increasing compared with the previous quarter, Make UK notes that elevated tribunal activity is increasingly becoming the norm for many employers. The extension of tribunal claim time limits from three months to six months only reinforces the importance of maintaining robust records and consistent employment practices.

For manufacturers operating across multiple sites, shifts and teams, consistency can be difficult to achieve. Policies need to be applied fairly, decisions need to be documented properly, and managers need confidence in the processes they’re following.

What’s particularly relevant for HR leaders is that many of the issues that eventually become formal disputes start much earlier through inconsistent communication, poor record-keeping or a lack of process visibility. As regulatory scrutiny continues to increase, organisations will need greater confidence in the quality and accessibility of their workforce information, not only to reduce risk but to support fair and consistent decision-making.

Workforce technology is becoming a strategic asset

The bulletin’s focus on workplace monitoring technologies perhaps tells the most interesting story. Three-quarters of manufacturers now use time and attendance systems, while half use access control systems. Looking ahead, 56% expect technology use to increase around attendance and absence management, 55% anticipate greater use to monitor activity and productivity, and 62% expect increased use in cybersecurity.

While conversations around workplace monitoring often focus on privacy and regulation, manufacturers tend to view these technologies through a more practical lens. They’re using them to understand attendance patterns, deploy labour more effectively, support workforce planning, improve site security and help meet compliance requirements.

Most manufacturers already have access to significant amounts of information and workforce data, but the real opportunity lies in how they can turn that information into better decisions around scheduling, productivity, compliance and employee experience. Organisations that can connect workforce data across different parts of the business are often better placed to spot trends early, respond to workforce pressures and make more informed decisions.

Turning workforce insight into action

The latest Make UK findings show that we’re seeing growing interest in more connected approaches to workforce management, where HR, payroll, talent and workforce data work together rather than sitting in separate systems. When leaders can see the bigger picture, they’re better placed to anticipate skills gaps, manage workforce costs, support compliance and improve the employee experience.

You can access the full Make UK Q3 2026 HR Bulletin via their website.