Labour & Conservative Plans & the Potential HR Implications for Manufacturers in Wales

Number 10 - Which party will lead our next Government?

With a lot of rhetoric around economic growth, what plans do the major political parties actually have to help UK manufacturers? How will the parties’ plans impact employment? And, what potential changes do HR teams in manufacturing need to be monitoring, or even preparing for?

UK manufacturing hasn’t had an easy time in recent years; increasing operational costs including materials, energy, fuel… increasing employment costs with higher minimum and living wage… reduced talent pool with the reduction of foreign workers… increasing cost of borrowing with higher interest rates and inflation… and with the assumption that these costs are all passed forward, but in reality, they’re not all covered. So when will this relentless debacle end for UK manufacturers – the very companies that are so desperately fighting to grow our economy?

Manufacturing is a vital sector in Wales (3rd largest for employment), employing a significant proportion of the workforce and contributing substantially to the economy.

Labour Party Plans & their Impact on Manufacturing

Historically labour have supported strong worker protections and public sector employment, with increases in minimum wages, enhanced union rights and stricter enforcement of employment standards.

Increased Worker Protections

Labour are proposing to simplify employment status; banning exploitative zero-hours contracts, increasing minimum wage (or “making work pay”), strengthening the collective voice of workers, and enhancing family-friendly rights.

Manufacturers will likely face higher operational costs, due to increased wages at all levels, not just the bottom rung. The simplification of employment status could reduce the flexibility of hiring temporary or contract workers, and increase administrative burden significantly. However, stronger worker protections could lead to higher levels of employee satisfaction and therefore retention, with potential benefits to long-term overall productivity.

HR will need to be ready to adjust payroll systems to comply with increased minimum wages. They’ll need to ensure proper classification of employees under the new simplified employment status and comply with new regulations. HR will also need to be meticulous in handling redundancies, ensuring all processes are compliant to avoid legal repercussions. And, with greater emphasis on family-friendly rights, HR will need to be effective in workforce management to consider employee availability and maintain operational efficiencies.

Investment in Green Technology

Labour are planning to significantly invest in green technologies and renewable energy to “make Britain a clean energy superpower”… or more importantly, give the UK energy independence.

Wales is primed to adopt green technology and manufacturers will likely benefit from the usual swathe of grants and subsidies aimed at reducing carbon emissions and adopting sustainable practices. This could lead to innovation and new market opportunities in green manufacturing and technology.

To fully capitalise on opportunities, HR will need to focus on up-skilling existing workforces to work with new green technologies – identifying expertise gaps, attracting new talent, organising relevant training, and amending job descriptions. In addition, the investment will result in additional job creation and HR teams need to be primed to manage recruitment processes.

Skills & Training Programmes

“Get back to work” is one of Labour’s plans and will rely heavily on the expansion of apprenticeships and vocational training to up-skill the UK’s workforce.

Apprenticeships and vocational training are already hugely important to manufacturers in Wales. But, increased funding for skills and training programmes should help manufacturers address the enormous skills shortage and improve productivity. And, access to a more skilled workforce should enhance the sector’s competitiveness and drive innovation.

HR teams that enhance apprenticeship schemes and develop clear pathways for career progression will elevate their employer’s brand and attract the top talent. HR will also need to implement robust training and development programmes to take full advantage of the funding that is likely to be made available.

Conservative Party Plans & their Impact on Manufacturing

The Conservative Party generally focuses on deregulation and business incentives aimed at stimulating economic growth and job creation within the private sectors… and specifically tackling Wales’ high rate of economic inactivity.

Economic Stability & Tax Incentives

Conservatives have been keen to emphasise their focus on economic stability with tax cuts and incentives for businesses. Particularly relevant in Wales with proportionally higher number of small businesses.

Tax cuts and business incentives should start to bring down the exorbitant operational costs for manufacturers in Wales – enhancing profitability and potentially stimulating investment to drive growth.

HR might be afforded the luxury of being able to reinvest in employees with greater benefit packages, training and development. But more importantly, with steady and sustainable growth comes the ability to make longer term plans with a stable and motivated workforce.

Flexible Labour Markets

Conservatives are touting reforms aimed at making the labour market more flexible.

Increased flexibility would make it easier for manufacturers to hire and manage temporary and contract workers – crucial for adapting to production cycles and fluctuating demand. Also crucial for manufacturers in Wales that struggle to hire full time employees due to ongoing skills shortages.

HR will have more leeway in employing temporary workers – helping deliver during production peaks. But, maintaining employee morale and job security will require exceptional people management. And, policies will need to be updated to reflect changes in employment laws, ensuring compliance while maximising flexibility.

Investment in Infrastructure

The tories are proposing significant investment in infrastructure projects to boost employment and stimulate economic activity.

Improving transport links and digital infrastructure, would be of huge benefit manufacturers in Wales – reducing logistics costs and improving supply chain efficiency. Wales is already starting to attract new business and investment to the region and enhanced infrastructure can only enhance the overall manufacturing environment.

Improved infrastructure should enhance recruitment – drawing more talent to remote regions, with HR being able to leverage this to showcase the benefits of working in such well-connected locations.

National Living Wage

The Conservative Party’s 2024 manifesto includes several key pledges regarding the National Living Wage (NLW). The party has committed to increasing the NLW to £11.44 per hour starting from April 2024. Additionally, the age threshold for receiving the NLW will be lowered to include workers aged 21 and over, down from the previous threshold of 23 and over.

This change is part of a broader strategy to improve wages and living standards, ensuring that younger workers also benefit from a higher minimum wage. This increase in the NLW is designed to help workers cope with the rising cost of living and to ensure that wage growth keeps pace with inflation and other economic factors. 

Apprenticeships & Business Kickstarter Scheme

Conservatives also have proposals to deliver 150,000 new apprenticeships over the next Senedd term and create a Local Business Kickstarter Scheme to support start-ups.

This could be huge for Wales in resolving the skills shortage in manufacturing and creating new home-grown businesses and helping manufacturing in Wales to thrive.

An influx of apprentices will require a significant amount of administration for HR teams – filing paperwork, managing training, reporting and supporting employees. It’s a great opportunity, but if not managed properly, could turn into an administrative nightmare.

Free Childcare for Working Families

Conservatives are promising to provide 30 hours of free childcare for working families with children aged between nine months and five years.

This could remove a barrier to work and enable many people in Wales to be in a position to consider permanent employment again.

HR teams could use in their recruitment campaigns – really helping people and enhancing the perception of their employer’s brand.

Which Party is Listening to Manufacturers in Wales?

Manufacturing businesses in Wales should closely monitor the election outcomes and be prepared to adapt to policy changes as each party’s policies present distinct advantages and challenges. Engaging with industry associations and policymakers can also help businesses voice their needs and influence decisions that affect their operations. Ultimately, being proactive and staying informed will be crucial for efficiently responding to the inevitable post-election changes to employment law.

At Personology, we’ll be listening carefully and helping our manufacturing clients with whatever changes arise and whatever opportunities are presented.

If you’re interested in having one of our professional HR consultants supporting your manufacturing business to grow, let’s arrange a meeting to discuss your future plans.