Make UK’s Q2 HR Bulletin, developed in partnership with MHR

Manufacturers continue to navigate one of the most complex workforce environments in recent years. While recruitment in the industry remains strong, employers are finding it increasingly difficult to secure the skilled people they need. At the same time, employment law reforms and rising tribunal activity are placing greater emphasis on workforce planning, compliance, and accurate HR processes.  

The latest Make UK Q2 2026 HR Bulletin, produced in partnership with MHR, highlights the challenges facing manufacturing HR teams. The findings of the report point to a growing need for organisations to strengthen their workforce visibility, improve compliance processes and use reliable workforce data to support better decision-making.

Here are the key takeaways that manufacturing HR teams should take from the report. 

Recruitment: high activity, lower success

Make UK’s survey reveals robust hiring demand: 89% of manufacturers actively recruited in Q2, up slightly from previous quarters. However, the success rate is falling, with less than 16% of companies managing to fill every open vacancy. In practice, this suggests that although employers are recruiting constantly, they are struggling to find the right candidates.  

For HR leaders, this has several implications:

• Recruitment timelines are becoming longer
• Vacancies remain open for longer
• Organisations need better visibility

Rather than focusing solely on recruitment campaigns, manufacturers should be reviewing workforce plans alongside business demand forecasts to understand where future capability gaps are likely to emerge. 

Technical skills shortages remain the biggest recruitment challenge 

The bulletin confirms that the shortage of technical skills continues to dominate recruitment challenges.

57% of manufacturers identified a lack of candidates with the right technical skills as their biggest recruitment barrier, making it the most significant challenge reported by respondents.  

Cost and time to recruit (32%) and shortages in soft skills (27%) also remain significant barriers.

These findings reinforce a long-term trend across manufacturing.

For HR teams, addressing skills shortages increasingly means looking beyond external hiring alone. Organisations may benefit from:

• Developing internal talent through learning and development
• Improving succession planning  
• Identifying transferable skills in employees
• Using workforce analytics to understand future capability requirements  

The organisations that plan ahead are often better placed to respond when recruitment markets tighten.

Stable pay settlements do not remove workforce pressures

Despite wider economic uncertainty, average pay settlements have remained relatively stable at around 3%, continuing a trend seen over the past year.

Stable pay may help organisations forecast labour costs more confidently, but salary alone is unlikely to solve recruitment challenges.

Employees increasingly evaluate employers based on factors including:

• Flexible working arrangements
• Career development
• Wellbeing  
• Workplace culture
• Long-term job security

This makes workforce planning and employee experience just as important as reward strategies when competing for skilled talent. 

Employment Rights Act changes require preparation now

One of the bulletin’s key focus areas is the upcoming right to guaranteed hours, introduced through the Employment Rights Act 2025 and expected to take effect in 2027.

Although 45% of manufacturers reported having no concerns about implementing the new requirements, many organisations continue to rely on flexible workforce models that could still be affected.

Manufacturers commonly use:

• Part-time employees
• Agency workers
• Independent contractors
• Fixed-term contracts
• Annualised hours arrangements

The challenge is not simply understanding the legislation. Employers also need confidence that they can:

• Accurately track working patterns
• Identify workers who may qualify
• Maintain consistent employment records  
• Evidence compliance if challenged

Preparing processes before legislation comes into force will place organisations in a stronger position than waiting until implementation deadlines approach.

Tribunal trends reinforce the need for stronger compliance

Around one in five manufacturers (21%) received notification of an Employment Tribunal claim during the quarter, while 19% reported tribunal claims increasing.

Although every claim has different circumstances, the data reinforces the importance of maintaining accurate documentation and consistent HR processes.

As employment legislation evolves, organisations need confidence that they can quickly access:

• Employment records
• Contracts
• Policy documents
• Absence history
• Disciplinary documentation
• Audit trails

Strong compliance is no longer simply about avoiding risk, it supports faster decision-making and greater organisational resilience. 

What these findings mean for manufacturing HR leaders

Taken together, the findings from the Make UK HR Bulletin suggest manufacturing HR teams are managing several interconnected challenges at once. If you recognise any of these challenges in your organisation, it may be time to review your recruitment and HR systems.  

If you are curious about what digital transformation opportunities are available, book a demo with MHR. Our experts can walk you through how a unified HR platform (like People First) simplifies compliance, improves visibility, and ultimately lets you focus on people rather than paperwork.  

You can read the Make UK HR Bulletin on their website.