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UK manufacturing recovery based on increase in low-skilled jobs, finds report

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Britain’s manufacturing recovery from the financial crash is built on an expansion of low-skilled jobs, according to a report that dents the sector’s modern, hi-tech image.

The findings show that since 2011, far from being the source of new jobs in research and development, the manufacturing sector has suffered a “fresh era of decline” as it relies on an expansion of assembly line roles in industries from drug making to food processing.

Output has “barely risen” in the past five years despite a 5% increase in the number of jobs created, the report found, revealing that the driving force of year-on-year productivity improvements have eluded the sector.

The report by the Sheffield Political Economy Research Institute highlights the uphill task faced by the government as it seeks to develop an industrial strategy and rebalance the economy towards manufacturing exports.

Some large manufacturers have expanded their research facilities in the UK, notably Dyson, the household appliance maker, which recently expanded its Wiltshire headquarters to house more than 450 extra engineers.

But many have persevered with outdated factories and coped with higher output by employing more staff, which means output per hour remains flat.

In the wake of the referendum vote, a string of car companies and other major firms have hinted that they could review their investments in the UK, adding toconcerns that manufacturing faces extra barriers to trade at a time when the sector is already weak.

Dr Craig Berry, the author of the report, said: “The growth in manufacturing jobs in the last five years, however limited, is to be welcomed. British manufacturing is not dead, but the sector is in great peril.

“There are few signs of sustainable growth in advanced manufacturing industries, and we now seem to be witnessing a new phenomenon whereby the UK manufacturing sector is creating lower-skilled jobs without enhancing its productive capacity. This is a different kind of manufacturing decline than we have experienced in the past, but it is a decline nevertheless,” he said.

The UK’s productivity rate, which measures output per hour, has only recently returned to its pre-crisis level. Official figures for 2015 show the UK’s average performance across all industries was 27, 30 and 35 percentage points lower than in France, the US and Germany respectively.

The number of jobs in manufacturing has slumped from 7m in 1971 to 3.8m in 2001 and little more than 2.7m this year. It means that fewer than 10% of the UK’s almost 32 million-strong workforce works in the sector, though servicing jobs that rely on manufacturing are not included in the figures.

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