With the recent increases in the National Living Wage and National Insurance contributions, understanding how to effectively manage your workforce has never been more critical. Contact our experts to discuss how they can help support your businesses future development.
With a 6.7% National Living Wage increase and higher employers' National Insurance contributions having taken effect, the food processing industry is facing significant cost pressures. In this article, we examine the workplace challenges reshaping the industry and how to manage them more effectively.
When it comes to risk, people are often the biggest asset—and one of the biggest costs. That’s especially true for UK food production. Rising wage bills, skills shortages, and shifting employee expectations are adding pressure to already tight margins
According to the JCCA 2024 Annual Report, labour costs are the number one area of inflation for food and drink businesses. 43% of respondents reporting increases of more than 10%.1
Beyond wages, additional expenses are escalating the cost of employment. For example, these include:
- National Insurance contributions
- Employee benefits
- Retention incentives
- Tribunal risks
For an industry that relies on operational continuity, seasonal flexibility, and high staff throughput, managing workforce risks has become a strategic priority.
Inflation may be slowing, but workforce costs aren’t
The wider economy may be showing signs of stabilisation, but the food processing industry is still feeling a lot of pain. Labour remains one of the most volatile—and least controllable—areas of expenditure. Recruiting and retaining high-performing employees is still challenging, especially in rural areas. Many businesses that produce food are competing for the same limited talent pools.
Even small increases in pay or employer costs can have a significant impact. Particularly across large-scale, shift-based workforces. This is where options like salary sacrifice schemes can help manage overheads without cutting corners. These schemes can reduce National Insurance costs while boosting take-home pay. However, not every company is set up to take advantage of these opportunities without guidance.
Workforce wellbeing and rising costs
Due to many challenges on the NHS, we are experiencing rising health and wellbeing concerns that impact employee risk. This includes, but is not limited to, absenteeism, productivity, and presenteeism. The poor work-life balance many employees face exacerbates these issues.
Access to primary care and GP support on the NHS is becoming increasingly difficult. As a result, employees are turning to their employers to provide these services and support their health and wellbeing needs.
Engaging with these issues correctly and proactively can improve:
- Employee engagement
- Development opportunities
- Retention and recruitment costs
- Employee wellbeing
The importance of addressing these challenges cannot be overstated. Improvements in these areas play an integral part in reducing company risks related to employee ill health and wellbeing. Considerations should be made to better understand these challenges and how to navigate them effectively.
Utilising an intermediary for support across these topics and the associated costs is vital for success. This approach also helps in gaining a better understanding of the risks within an employer’s workforce.
Our colleagues at Mercer can help you build a program that’s right for you, your people, your industry and locations, delivering maximum value in a rapidly-evolving world of work.
When workplace challenges become legal liabilities
Increased pressure on employees can also lead to operational risks. Tired or undertrained workers are more likely to make mistakes or suffer injuries. This is especially true in fast-paced environments or when operating heavy machinery. This raises the likelihood of:
- Costly personal injury claims
- Medical expenses
- Time off work
And let’s not forget the UK’s increasingly litigious culture. Employers across all sectors are facing more frequent employment tribunals and growing legal bills. These cases are not only disruptive and expensive, they can have a marked impact on reputations and internal morale. Plus, the growth of employer and job review sites like Glassdoor offer employees a powerful public platform to vent their anger.
Insurance programme reviews can unlock value
With rising costs and complex claims, many businesses haven’t reviewed their employer liability or legal expenses cover in years. That’s a missed opportunity. A proactive insurance review can help to:
- Identify gaps
- Reduce exposure
- Deliver cost savings in today’s soft market.
Working with an insurance broker that understands the realities of the food production industry can also unlock added value. Businesses can take various steps to reduce risk. For instance:
- Structuring benefits
- Implementing return-to-work policies
- Seeking guidance on claims prevention and cover optimisation
These measures can help ensure that their employees are more productive and engaged in their work.
Support with Health & Safety and employment law
Beyond insurance, addressing workforce risks and food safety proactively is vital. Marsh Commercial offers Health & Safety training and employment law support to help businesses manage these challenges before they escalate.
Implementing robust policies and providing regular training on food safety and quality can help mitigate risks. An important aspect of this is ensuring that employees understand the food processing methods and the nutritional value of fresh food products they handle. This includes canned fruits, fresh fruits, and raw ingredients. This approach fosters a safer, more compliant workplace and further protects consumers.
Workforce risk is business risk
Workplace issues and pressures aren’t just an HR issue—they’re a business resilience problem. From operational disruption to reputational damage, the risks tied to people are growing more complicated and more costly. In short, as the market for processed food products such as ready meals and food additives evolves, so should your approach to workforce-related risk.
Next, take a look the legal and regulatory challenges facing food processors around the world—and how to stay ahead of future change.
Sources
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