Labour Market Overview: UK Defence, Aerospace, Space & Nuclear Industries Show Signs of Hiring Stability Amid Economic Headwinds

After a successful visit to the Aerospace Wales Expo in Llandudno at the tail end of Q1, we sat down with aerospace, defence and space SMEs and employment lawyers to discuss the upcoming Employee Rights Act and how it impacts hiring strategy, culture and retention in the context of the new financial year. The Employee Rights Act 2025 is the biggest shake up in employment law that many of us will have seen in our lifetimes. It's a silent change in risk, workforce control and support and, potentially, programme delivery stability.

The UK labour market is tightening for junior engineers. Youth unemployment has risen to ~16% amongst 16-24 year olds, with nearly one million young people being NEET (not in employment, education or training). Engineering apprenticeships have fallen by approximately 40% since 2017, yet the UK manufacturing sector still needs an estimated 168,000 new workers per year. This creates a paradox: a skills shortage alongside a hiring bottleneck for junior candidates. 

The UK space sector is growing at pace, but access to skilled talent is getting harder. According to the UK Space Agency, the UK space sector generates over £17 billion in annual income and employs more than 45,000 people. Growth ambitions continue to remain high, particularly in satellite technology, launch capability and space-enabled services. However, employers consistently report skills shortages across systems engineering, satellite communications, propulsion and ground segment operations.

Meritus Talent, as part of the Recolution Recruitment Group, has been awarded Level 2 Disability Confident Employer status through the Disability Confident initiative. This accreditation sits firmly under the first pillar of our CSR strategy: People & Inclusion – Creating Opportunity for All . Operating within aerospace, defence and advanced engineering, we understand the value of highly skilled individuals who think differently, solve complex problems, and drive innovation. Inclusive recruitment is not simply a moral imperative, it is a strategic one. By removing barriers and ensuring fair access to opportunity, we strengthen both businesses and careers. The accreditation also marks the launch of our Open Doors Pledge , a clear commitment to championing inclusive hiring practices across our own operations and within the organisations we support. We are not simply opening doors. We are holding them open. We will continue to evolve our processes, challenge outdated thinking, and support our clients in building accessible, future ready workforces.

The UK defence sector is growing. With increased geopolitical instability and sustained government investment, demand for skilled engineers, systems specialists and programme leaders continues to rise. At the same time, access to experienced, security-cleared talent remains constrained. For UK defence employers, ex-military professionals represent one of the most underutilised yet strategically aligned talent pools available. 

Hiring aerospace engineers in the UK is increasingly complex. Demand for systems engineers, propulsion specialists, manufacturing engineers and avionics experts continues to outpace supply. According to ADS Group , the UK aerospace sector supports more than 100,000 direct jobs and remains one of the country's most R&D-intensive industries, but this sustained investment in innovation has increased competition for highly-specialised engineers. For those hiring for aerospace vacancies, reactive recruitment is no longer sufficient.

The publication of the UK Advanced Nuclear Framework bears great significance for the UK nuclear market. By introducing the UK Advanced Nuclear Pipeline (UKAN) , structured project readiness assessments and clearer access to revenue support and National Wealth Fund financing, the government has reduced investment uncertainty around SMRs, AMRs and MMRs. 

What needs to change to address missing engineering headcount?

The UK aerospace, defence and space industries are world-class. Our maintenance, repair and overhaul (MRO) organisations are renowned for their safety culture, precision engineering and operational excellence. But behind the headlines of global growth and technological innovation lies a stark reality; a critical shortage of MRO talent that could become existential for the UK unless we build a pipeline that competes globally and urgently.