As of April 2025, the UK government has raised the National Living Wage (NLW) from £11.44 to £12.21 per hour for workers aged 21 and over (UK Government, 2024). While this aims to support lower-income workers amid inflationary pressures, the increase also brings operational and strategic challenges, particularly for the Fast-Moving Consumer Goods (FMCG) and food manufacturing sectors, where labour accounts for a significant share of total costs.
The Financial Strain on Manufacturers
FMCG and food manufacturing businesses often operate on tight profit margins and are particularly sensitive to labour cost fluctuations. A company employing 50 production-line workers on full-time contracts could see wage-related outgoings increase by over £100,000 annually after factoring in employer National Insurance contributions and pension obligations (Forvis Mazars, 2024).
These higher labour costs are compounded by other inflationary pressures such as energy bills, packaging, logistics, and raw material prices—all of which have remained volatile since 2022.
How Businesses Are Responding
In response to this multifaceted cost challenge, many businesses are adjusting their operations. Common strategies include:
- Operational Efficiency
Manufacturers are investing in process improvements, lean methodologies, and technology to enhance output per employee, helping to absorb increased wage costs without sacrificing productivity. - Automation and Robotics
Capital investment in automation—especially in packaging, warehousing, and repetitive production-line tasks—is accelerating. A report by the British Automation and Robot Association (BARA) notes a significant uptick in demand from food manufacturers in particular. - Selective Price Increases
Rather than applying uniform price hikes, many businesses are introducing increases strategically, often targeting premium products where consumers are more tolerant of pricing adjustments. - Flexible Workforce Models
Some businesses are re-evaluating shift patterns, introducing part-time or seasonal contracts, or outsourcing non-core functions to manage headcount more dynamically. - Enhanced Employee Value Proposition (EVP)
Non-monetary benefits such as extra leave, upskilling programmes, and hybrid working arrangements (where feasible) are being used to help retain talent without putting further pressure on the wage bill (CIPD, 2024).
Labour Market Tensions and Consumer Impacts
From a consumer perspective, higher costs could mean further price rises at the checkout. Shoppers may start to favour value brands or own-label products, which could shift demand away from certain lines, affecting production planning and workforce needs accordingly.
For employers, the rise in NLW may further intensify competition for skilled labour. Shortages of technicians, supervisors, and quality assurance professionals remain persistent issues in the food and FMCG sectors. As a result, businesses must not only pay competitively but also offer genuine long-term development and career paths to attract and retain staff.
Partnering to Navigate Change
At Jonathan Lee Recruitment, we understand how wage legislation, economic volatility, and talent scarcity intersect, especially in sectors like FMCG and food manufacturing. We’ve supported clients through cyclical market changes for over 45 years, combining recruitment expertise with deep sector knowledge.
Whether you’re an employer seeking workforce solutions or a candidate looking to advance your career in this evolving industry, we’re here to help.
Talk to us today at Jonathan Lee Recruitment about how we can support your talent strategy or job search. Let’s shape the future of manufacturing together.
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