LONDON, June 17, 2026 (GLOBE NEWSWIRE) — The number of NEETs and the UK benefits bill could fall within three years if the government and industry succeed in closing the skills gaps and shortages plaguing our economy, according to leading charity Enginuity.
A new report from Enginuity, the former Engineering and Manufacturing Sector Skills Council, SEMTA, to be published on Wednesday 17 June, shows that the skills gap in the engineering and manufacturing sectors is costing the UK more than £5 billion a year – and if not addressed urgently, it will further set the ‘lost generation’ identified by Alan Milburn adrift.
The report, titled Mind the Gap, says the sector is facing a ‘perfect storm’ of interrelated factors, which will only make things worse over time.
The £5 billion lost annually to skills shortages represents a major missed opportunity.
Based on typical starting salaries in the sector, this would amount to supporting more than 300,000 apprenticeships per year – a scale of interventions that could significantly reduce the number of people not in education, employment or training (NEET) by 30% and help reduce pressure on the benefits bill.
Ann Watson MBE, chief executive of the charity Enginuity, which commissioned the report, said: “The findings highlight a significant productivity challenge for our sector, but also a clear opportunity. At a time when Britain is striving to boost growth, we cannot afford to see talent, investment and potential go to waste.”
“We have a generation of young people struggling to access good work, employers clamoring for skilled talent and growing economic inactivity that is putting increasing pressure on public finances. The solution is before us.
“Government should take note of these findings and ensure they are reflected in efforts to remove barriers to growth and talent entering the sector. Through the Policy Center for Supply Chain and SMEs: Powered by Enginuity, we will communicate these findings and recommendations directly to government and work with them to drive change.”
SQW survey data shows that skills challenges are particularly prevalent among engineering and manufacturing SMEs.
Around half of SMEs (small and medium-sized businesses) surveyed reported skills issues in the past year, with 36% experiencing skills gaps and 35% experiencing skills shortages.
Where there are skills shortages, companies estimate that around one in five employees are affected, while SMEs facing skills shortages typically report two to three difficult-to-fill vacancies. SMEs report shortages in fundamental technical and manual skills, alongside growing gaps in digital, data and management capabilities.
These challenges are not limited to entry-level roles and are usually associated with lost productivity, with knock-on effects on revenue and future growth.
Based on research data and economic models, it is estimated that skills challenges are costing the engineering and manufacturing sector approximately £5.2 billion per year, equivalent to around 10 percent of their annual amount Exit. At an individual company level, affected businesses may lose as much as 10% of their annual Gross Value Added (GVA), which equates to around £110,000 per business, per year.
Key findings
- The sector is facing a ‘perfect storm’ of interrelated factors causing skills shortages and shortages, with complex and non-linear interactions.
- The aging workforce can be seen as the main underlying factor: many skilled workers are approaching retirement, and there are too few young people entering the sector to replace them. The resulting skills gaps and shortages are most acute in advanced technical roles.
- The talent pipeline is thin. Too few young people and career changers are choosing a career in engineering or manufacturing, often because of misinformation about pay and career prospects.
- The main factors contributing to the thin pipeline are the sector’s image problem (tech and manufacturing jobs are seen as dirty and poorly paid), growing societal preferences and pressure to go to higher education, and young people’s expectations about remote working and flexible hours, which do not match the sector’s reality.
- SMEs are struggling to solve pipeline problems. Severely limited in time and resources, they are stuck in a vicious cycle: skills gaps and skills shortages stifle productivity, reduce employee turnover and limit training budgets. This creates a feedback loop that deepens the shortages that SMEs already face.
- Apprenticeships are seen as a viable tool, but are expensive for SMEs due to the necessary input from senior colleagues. Furthermore, as skills challenges increase, companies are increasingly competing for the same workers, both within and across sectors. This risks losing trained individuals to other SMEs and large companies.
- The quality of available training is a major concern for SMEs. They report a ‘postcode lottery’ when it comes to provider quality, outdated course content and delivery models that do not match operational needs. SMEs prefer shorter, modular and practical training courses, but the current offering often takes up valuable time away from the workplace.
Half of the companies and experts who contributed to this survey believe that skills challenges will increase over the next five years. Decisive and coordinated action is needed to address shortcomings in information, signaling and coordination.
Remark:
The annual Gross Value Added (GVA) of the Manufacturing and Engineering sectors represents the value of the goods and services produced by the sectors in a given year.
Gross value added represents the net contribution of a company or sector to the economy. It is calculated by subtracting the value of intermediate inputs (goods and services purchased by the relevant firms) from the total value of output produced.
The central objective of the study was to quantify the economic costs of skills-related challenges in terms of ‘lost’ gross value added at sector level, i.e. the value of the additional goods and services that could be produced if the skills-related challenges were addressed.
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