Blog: Worker shortage ‘a bigger issue than Brexit’ for manufacturers in North –

Northern Ireland’s manufacturers are clamouring for staff in the wake of a Brexit-led exodus of EU workers and a fall in migration during Covid.

tephen Kelly, chief executive of Manufacturing NI, which represents 5,500 firms with 88,000 employees, says labour shortages are now a bigger problem than Brexit, with factory bosses falling over each other to attract staff.

“The labour market is white hot at the moment up here,” he told the Irish Independent.

“You have parts of Northern Ireland where you have more than full employment, never mind full employment, where, by necessity, businesses across the road from each other are stealing each other’s staff – and they’re offering them an extra £1 an hour, £1.50 an hour.”

Some manufacturing sectors saw wage increases in excess of 7-8pc in 2021, a trend that Mr Kelly expects to continue this year. Added to soaring energy costs and supply chain woes, it is putting added pressure on businesses.

“Do we fear that it could collapse and go beyond what employers are able to pay? I don’t think we’re at that point just yet, but it’s hurting. It really is hurting.”

According to a tracking survey conducting by Manufacturing NI, published yesterday, 60pc of manufacturers reported access to labour as their biggest issue, with a similar number saying Brexit is the least challenging problem they face.

A total of 1,115 positions at Manufacturing NI firms were vacant in the 163 companies surveyed.

But Brexit is still biting for Northern Ireland’s firms, who are finding it costly and “overwhelming” to import British goods.

A fifth (21pc) of survey respondents say British suppliers are unwilling to engage with the extra customs paperwork required under the Northern Ireland Protocol to the UK’s 2019 EU exit deal.

Some problems have been ironed out, with almost 29pc of Manufacturing NI firms reporting increased trade with the EU – up from 11pc in July – while more than two-thirds of firms say they are seeing no impact or only minor impacts from the Protocol. Almost 17pc say it had positive benefits in 2021.

“For us, the sweet spot – the one globally significant advantage that no one else has – is the Protocol and we’re already beginning to see evidence of people recognising that and people capitalising on that,” Mr Kelly said.

But complex rules-of-origin tariffs on small manufacturing parts, steel quotas (and a 25pc tariff) and extra paperwork on EU goods that pass through the UK en route to Northern Ireland are eating into margins, particularly
for smaller firms that are importing smaller, mixed shipments.

One Manufacturing NI member that does only 3pc of its trade with the EU is having to hire 25 extra people to cope with the 19 million new data fields per year that it needs to fill in to get goods from the continent.

“The full union customs code is designed for international trade – not for trade that, for an Irish audience, would go from Cork to Dublin, which is what people are experiencing here,” said Mr Kelly.

“People are sucking it up. They are getting to grips with it. They are becoming more experienced. But the cost of all of this is enormous.

“It soon becomes a financial burden that will damage the Northern Ireland economy, unless it’s repaired.”

Mr Kelly is hopeful the issues will be worked out, following what the UK and EU described as a “cordial” meeting between UK foreign minister Liz Truss and the EU’s Brexit commissioner, Maros Sefcovic.

“It’s a very welcome change in mood,” he said.

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