UK manufacturing labour cost: salary benchmarking
Manufacturing organisations looking to relocate or expand operations to the UK face increasing financial pressures, particularly around workforce costs. For such businesses seeking long-term operational success in the UK, effective labour cost management is essential.
Your manufacturing business must ensure its compensation strategies remain competitive to attract and retain top talent. One of the most effective ways to achieve this is through salary benchmarking. By regularly assessing market pay rates, your manufacturing organisation can ensure its salaries remain fair, equitable and in line with industry standards.
With recent increases to the national living wage, the hourly rate for workers aged 21 and over rose to £12.21 in April 2025. This equates to an annual pay rise of around £1,400 for over three million employees, significantly impacting the labour-intensive manufacturing sector. This is why salary benchmarking has become such a vital strategic tool.
Here, we give an overview of how salary benchmarking benefits UK manufacturers and how to implement it.
Why salary benchmarking matters for manufacturing firms
Salary benchmarking equips manufacturing leaders with the insight needed to build competitive, compliant and financially sustainable pay structures. This is particularly important when navigating the complexities of the UK employment landscape.
Key benefits of salary benchmarking in manufacturing
- Align pay with industry and regional standards
Pay rates vary widely across UK regions and manufacturing sub-sectors. Benchmarking ensures your compensation packages are aligned with local market expectations and sector norms, whether in food production, automotive or precision engineering. - Attract and retain skilled talent
With persistent skills shortages across technical and trade roles, competitive compensation is critical to securing and keeping the workforce needed to support your production targets. - Maintain compliance and fairness
Salary benchmarking helps ensure internal equity and compliance with UK employment regulations, including equal pay requirements and minimising the risk of disputes or damaging your reputation. - Forecast and control labour costs
Manufacturers must maintain cost control to protect margins. Benchmarking provides valuable insight for labour budgeting, including for shift premiums, seasonal roles and overtime. - Strengthen workforce stability
Transparent and competitive pay structures support employee satisfaction and retention, reducing costly turnover, especially in roles requiring training or certification.
How Moore Kingston Smith HR Consultancy can help
At Moore Kingston Smith HR Consultancy, our reward specialists can help your manufacturing organisation navigate the complexities of salary benchmarking both in the UK and globally. With over 30 years’ reward strategy and management experience, we understand the nuances of diverse labour markets, enabling us to give you the insight that is not only regionally relevant but globally informed.
Whether you operate in the UK or across multiple markets, we provide:
- Manufacturing-specific salary benchmarking reports tailored to your sub-sector and business size;
- compensation planning support that aligns with your financial and productivity objectives;
- compliance advice to ensure you meet wage and employment law standards;
- customised pay structure design to support long-term workforce engagement and cost control.
Contact HR Consultancy’s reward team for a no-obligation conversation.
