UK manufacturers slow hiring as AI use rises to 76%

SOFIAH NICHOLE SALIVIO

News Editor

WorkJam has published research showing that more than half of UK manufacturers have reduced or slowed hiring in the past six months. The survey also found that 76% are using AI in workforce or production operations.

The findings suggest the sector is trying to contain rising costs while dealing with recruitment, retention and regulatory pressure. Of the 142 manufacturing professionals surveyed, 19% said reducing costs was now the industry’s biggest challenge.

Hiring has been one of the clearest pressure points. Some 52% of organisations said they had reduced or slowed recruitment over the past six months, while 24% said rising labour costs and productivity pressures were slowing hiring in skilled production and engineering roles.

Another 23% said they were increasing prices to offset higher costs. At the same time, workforce issues remained prominent, with 16% identifying employee engagement as a leading challenge and 15% citing retention.

The data suggests manufacturers are not only responding to cost inflation but also reshaping labour management decisions. Nearly 40% of respondents said the Employment Rights Bill and wider labour regulations had already forced them to change how they manage their workforce.

Across the wider sample, 67% said current pressures were leading them to rethink how they manage and organise operations. Half said cost control now takes priority over employee experience and workforce enablement.

AI uptake

AI use appears broad but uneven. While more than three-quarters of respondents said their organisation was using AI to support workforce or production operations, only 11% said they had deployed it at scale.

That gap points to limited operational maturity despite strong interest in the technology. Just 7% said their primary reason for investing in AI was to improve the shopfloor experience, with most efforts instead focused on efficiency and productivity.

The results suggest manufacturers are treating AI mainly as a tool to manage output and costs rather than as a direct way to improve day-to-day working conditions for frontline staff. This comes as companies continue to weigh immediate financial constraints against longer-term workforce needs.

Workforce strain

The survey was conducted at Smart Manufacturing Week 2026 and reflects responses from a relatively small but targeted group of industry professionals. Even so, the pattern is consistent: businesses are trying to absorb higher employment costs without losing the experienced staff needed to keep factories running smoothly.

This creates a difficult position for employers in production and engineering, where specialist skills can be hard to replace. Slower recruitment may ease short-term spending, but it also risks adding pressure to existing teams if vacancies remain unfilled.

WorkJam said the findings showed manufacturers were trying to manage cost pressure while maintaining engagement and retention among frontline workers. The company, which sells employee engagement software for frontline sectors, said the results showed spending discipline and workforce support are now being weighed side by side.

Mark Williams, Managing Director, EMEA, at WorkJam, said: “Manufacturers are currently facing difficult business decisions, but as the findings suggest, many also recognise that reducing costs cannot come at the expense of workforce capability.

“Engagement and retention remain high on the agenda because experienced frontline and production employees play a critical role in maintaining productivity and operational performance. Manufacturers now need to invest in technology, such as AI-powered frontline employee engagement platforms, to improve efficiency and simplify operations while continuing to provide managers and frontline teams with the support they need to do their jobs effectively.”