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Engineering services firms continue to struggle with labour shortage

The latest quarterly survey of the UK engineering services sector, supported by the ECA, BESA, SELECT, and SNIPEF, indicates that electrotechnical businesses are still hindered by slow growth, largely due to a shortage of skilled workers. 

This issue has persisted for the last four quarters, with the last survey at the start of 2024 noting that the skills shortage was impacting engineering services firms, despite a growing order book

Now, nearly half of the survey respondents (48%) reported having vacancies within their organisations. Of these, 50% have difficulty filling these positions due to a lack of suitable applicants. Additionally, 46% noted that applicants often lack the right attitude or behaviours, while 45% stated that pay expectations were too high.

The survey highlighted that over 8 in 10 (85%) respondents were SMEs, employing 250 or fewer people.

These findings reflect ECA’s continued efforts to improve skills within the sector, including the ECA Recharging Electrical Skills Charter. This charter emphasises the importance of the electrical contracting sector and electrical skills in achieving the UK’s net zero goals.

Andrew Eldred, Chief Operating Officer of the ECA, stated, “Through further action at national and local levels we need to bring the number of electrical apprentice start ups to a sustainable level. We should also expand appropriate green upskilling opportunities for already qualified electricians, using the industry’s own ‘Electrician PLUS’ kitemark.

“Policymakers need to start listening to engineering services SMEs and reshape the skills system to deliver training routes which real-world employers value and recognise. This is essential if we are to build an appropriately sized workforce with the right qualifications to install low-carbon technologies efficiently and safely.”

The Electrician PLUS framework, launched by The Electrotechnical Skills Partnership (TESP) in August 2023, focuses on the core competencies of a qualified electrician as a foundation for upskilling in low-carbon installation.

Regarding payment practices, 63% of survey respondents indicated that commercial clients and main contractors take 31 to 60 days to pay for work, while 13% reported payment times of 61 to 90 days. Half (49%) of respondents said public sector clients take 31 to 60 days to pay, and 13% noted that payments can take 61 to 90 days.

Almost three in five (58%) respondents mentioned that between 1 and 10% of their turnover is currently held in retentions.

Rob Driscoll, ECA Director of Legal and Business, commented, “Until the scope for late and abusive payment (including retentions) is resolved the health of the engineering services sector will continue to be stunted. Slow growth disproportionately affects SME firms who tend to be at the end of the supply chain.

“Without more action to fairly and proportionately spread risk throughout the supply chain, there is a potential for unnecessary business failure in the industry. For electrotechnical firms to remain resilient, there must be fairer risk sharing between clients and industry. There will be little growth in the economy towards green energy and net zero if those at the delivery end of the supply chain carry a greater burden of risk.”

Debbie Petford, BESA’s Director of Legal and Commercial, added, “In our recently published Top 30 M&E Contractors Report, many of the sector’s senior managers noted that the prospects for growth were improving – particularly in high value sectors like healthcare, data centres, and research.

“They noted that there was a clear pipeline of projects for the next three to five years in sight and that MEP services were responsible for a higher proportion of the value in these strong growth sectors.

“However, they continue to be worried about the lack of skills and diversity in the industry’s workforces, and the need to improve productivity by wider adoption of digital and off-site solutions which require new skillsets. This will clearly be a barrier to growth in the near future and BESA will be working hard with its members to help them plug key gaps. We also need to see some concrete proposals from the main parties about how they would help employers address skills and recruitment challenges in the general election campaign.”

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