The Chemical Industry: Recruitment trends and insights
The chemical industry has quickly emerged as a prominent player in the UK’s economic landscape, contributing over £54 billion in exports and adding £30.7 billion in value to the national economy. This impressive performance positioned it as the second-largest manufacturing industry in the country, trailing only behind machinery and transport equipment.
The UK’s chemical industry is a versatile and far-reaching entity, actively engaged in various key sectors. This industry covers a wide range of things, from basic chemicals like inorganic substances, petrochemicals, and polymers to making things like paints, detergents, and personal care products. It even goes into more specialised areas, like adhesives, flavours, fragrances, and a variety of industrial products such as lubricants, fuel additives, construction materials, and catalysts.
Challenges the chemical industry currently faces
The chemical industry in the UK is currently facing several long-term challenges. Data gathered from the Chemical Industries Association show that the largest challenge the chemical industry is facing is the cost of energy, specifically gas. As opposed to other industries, gas is not just an energy source, but a feedstock. Due to this, it intensifies the industry’s exposure to rising prices.
Direct Cost: The biggest impact on the chemical industry is felt in production expenses. The UK’s chemical industry is highly energy-dependent, relying on gas as a primary feedstock. Industrial gas prices are subject to volatility, depending on market conditions. Prices have consistently increased compared to levels observed just 18 months ago. In response, the UK Government intervened to provide support to businesses between October 2022 and March 2023 by imposing caps on wholesale gas and electricity costs at £75 and £211 per MWh. While this intervention was welcomed, the supported prices still stand significantly higher than they did 18 months ago.
Indirect: In the world of economic reality, households are allocating a significantly larger portion of their disposable income towards energy expenses, leaving less available for discretionary spending in other areas. This presents the potential for an economic downturn across the UK and Europe. Production declines within the EU chemical industry, which is the UK’s largest customer, are beginning to impact the demand for UK chemicals.
The challenge of energy costs is not the sole issue confronting UK chemical producers. Domestic producers also grapple with challenges related to raw material shortages and price hikes. China’s production has been affected by its Zero Covid policy, leading to plant shutdowns and delivery disruptions. As the global economy emerged from the pandemic, the prices of raw materials surged to unprecedented levels. This is not surprising since energy cost increases get passed down the supply chains, ultimately affecting everyone involved. This has posed an ongoing challenge for the industry over the past two years, and it has been further exacerbated by the energy crisis and global inflation.
The availability of skilled staff
A major short-term challenge facing the UK chemical industry is the availability of skilled staff, along with recruitment and retention. A workforce possessing the necessary skill set has been a persistent issue for the UK chemical industry for some time. The pandemic has intensified some of these challenges, but an unhelpful immigration policy and an ageing workforce have created a perfect storm of workforce-related issues.
Labour shortages are a challenge across the entire UK economy, with the UK employment rate still 1.1 percentage points lower than pre-pandemic levels due to an increase in the number of economically inactive individuals between the ages of 16-64. This increase in economic inactivity is observed among individuals aged 50-64, who are either long-term sick, have retired early, or possess critical skills within the chemical sector.
This overall decline in labour supply has put pressure on the manufacturing workforce. Currently, there are 3.6 job vacancies in the manufacturing sector for every 100 jobs, significantly exceeding the long-run trend of 1.7 and the pre-pandemic peak of 2.6.
The Employment Landscape
The chemical and pharmaceutical industry in the UK boasts a workforce of more than 140,000 individuals, with an additional equivalent of 33,000 full-time employees dedicated to chemical and pharmaceutical research and development across the nation. This workforce enjoys an average weekly salary that surpasses the rest of the manufacturing sector by over 34%, and it stands nearly 50% higher than the national economy’s average wage.
When examining the gender composition within this sector, it’s noteworthy that 33.2% of the workforce comprises women, placing the chemical industry in the top third among manufacturing sectors in terms of female employment. Chemical and pharmaceutical businesses play pivotal roles in numerous high-value supply chains, estimated to bolster an additional 350,000 jobs, many of which are situated in economically disadvantaged regions of the UK.
This industry excels on the national stage in terms of research and development (R&D) investment, annually committing more than £8.0 billion to this endeavour. This accounts for over 17% of the UK’s total business R&D expenditure and corresponds to 0.4% of the nation’s income. It plays a crucial role in fulfilling the government’s commitment to allocate 2.4% of GDP to public and private research and development by 2027.
In addition to this substantial R&D investment, the industry funnelled an additional £5.8 billion in 2021 into various areas of business investment, encompassing infrastructure, vehicles, and machinery. This represents a noteworthy 17.2% of private sector manufacturing’s overall expenditure in these domains.
Bridging the Skills Gap in the Chemical Industry
The chemical industry has consistently demonstrated resilience, even in the face of persistent disruptions, and it continues to be a cornerstone of the UK economy. To ensure that it continues to draw from a diverse and inclusive talent pool, crucial for maintaining its pivotal role, it is imperative to present the industry as an appealing and dynamic field in which individuals can build fulfilling careers. There is an urgent need to take proactive steps to attract the future workforce, with the ultimate goal of supplying the industry with a continuous influx of highly skilled professionals.
Recruitment represents just one facet of this endeavour. It is essential that there is employee mentoring, training, and ongoing development, all of which are vital components for addressing the existing skills gap. Companies within the chemical industry must commit to prioritising skills development, whether through the provision of vocational training and skills programs or by actively supporting opportunities for continuous learning.
Incoming talent must receive education about the industry’s profound significance to both the economy and society at large. By igniting their curiosity and fostering an understanding of the crucial role that chemicals play, the industry can attract a new generation of enthusiastic workers who are dedicated to ensuring its enduring prosperity.
Strengths in the Chemical Industry
- Robust exports reaching diverse global markets
- Exceptional resource efficiency
- Abundance of highly skilled researchers and personnel
- A culture of innovation, supported by outstanding research and university resources
- Positive labor relations
- A strong commitment to safety and responsibility throughout production and distribution
- Capacity to meet advanced consumer demands
- Progress in enhancing public perception
- Increased political acknowledgement and appreciation are driven by the industry’s vital role in addressing COVID-19 and its broader societal and economic significance.
Facts and Figures
The chemical and pharmaceuticals sector stands as one of the United Kingdom’s most prominent industries, playing a crucial role in the nation’s economy. As of 2020, this industry generated substantial revenues of 73.7 billion British pounds, contributing significantly with a Gross Value Added (GVA) of 28 billion British pounds. Moreover, within the European chemical market, the UK ranks prominently as one of the leading countries in terms of chemical revenue.
This dynamic industry is the driving force behind the contemporary world, with over 95% of various sectors relying on chemical applications. It holds the distinction of being the second-largest manufacturing industry in the UK. Notably, it directly employs more than 94,000 individuals, with an estimated indirect impact on approximately 205,000 more. With a turnover exceeding £73 billion, it represents a substantial contributor to the country’s economy and will continue to play a pivotal role in the UK’s economic prosperity in the foreseeable future.
- Turnover = £75.2 billion
- Capital spending = £5.8 billion
- R&D investment = £8.2 billion
- Number of chemical companies across the UK = 4,535
- Direct Employees in the chemical industry UK = 141,000
The UK’s chemicals industry faces substantial challenges, but its resilience, innovation, and economic significance make it a cornerstone of the nation’s economy. Navigating these challenges will require strategic investments in skills development, continuous learning, and public awareness to ensure its enduring prosperity. As we move forward, the industry’s ability to adapt and thrive will remain a testament to its enduring importance.