The West Midlands has been ranked the most expensive city in the UK for engineering talent, according to research by SJD Accountancy.
According to data obtained from National Statistics, engineering professionals in the West Midlands now earn a median annual salary of £43,046, up from £37,359 in 2012, a rise of 15 per cent. Further south, pay for engineers in London increased by 3.2 per cent, from £41,483 to £42,837 over the same period.
Five years ago, the West Midlands was placed sixth out of 11 UK regions for engineering sector pay, behind London, South East, East Anglia, South West and Scotland.
SJD Accountancy said that shortages of engineering skills worsened in the West Midlands in recent years as the automotive sector posted record sales and ramped up investment and production. The recent announcement of job losses at Jaguar Land Rover, and the takeover of GKN, however, could curb pay inflation in the West Midlands engineering sector.
Derek Kelly, CEO of SJD Accountancy, said: “The success of the UK automotive sector over the last five years has made the West Midlands the most expensive region for engineering talent in the entire country. Finding the right engineering skills in Birmingham has become increasingly difficult, forcing businesses to offer more money and other benefits. Carmakers have become more reliant on recruiting engineers from the supply chain, triggering bidding wars as suppliers seek to retain skills.
“While the recent fall in car sales could temper pay inflation for engineers in the West Midlands, major infrastructure projects getting underway, including HS2 and works to the M6 motorway, could offset any decline in demand in the automotive sector.
“As permanent vacancies became harder to fill, the use of contractors to plug skills gaps has dramatically increased. Many engineering professionals prefer to work as contractors, and in a candidate tight market, they have more bargaining power to turn permanent jobs into contractor roles.”
The number of engineering contractors is said to have risen from 32,911 in 2011 to 55,393 in 2016, a rise of 68.3 per cent. At the same time, the number of employees in the engineering sector increased by 0.9 per cent, from 203,000 to 205,000.
SJD Accountancy said that the government needs to look at ways to encourage the development of engineering skills. The new apprenticeship levy and obligations on smaller employers to meet some of the training costs of apprentices has led to a decline in opportunities. There was a 5.7 per cent decline in engineering apprenticeship starts in 2016/17. 74,010 people started engineering apprenticeships in 2016/17, down from 78,480 in 2015/16.
Kelly said: “We have long argued that there should be some sort of tax incentive for engineering contractors to invest in training and personal development. A contractor can work for several engineering businesses in a year, so they play a vital role in transferring skills between organisations, yet they are not eligible for staff training and the cost of training they incur themselves is not a tax allowable expense.”