Engineering Industry Review of 2025: A Year of Transformation and Challenge

The engineering industry in 2025 has demonstrated remarkable resilience and adaptability, navigating a complex landscape of technological disruption, skills shortages, and evolving workplace expectations. As the year draws to a close, it becomes evident that the sector has reached a critical juncture, balancing unprecedented opportunities with significant challenges that will shape its trajectory for years to come. This comprehensive review examines the key developments, trends, and insights that have defined the engineering profession throughout 2025, drawing upon extensive research and data from leading industry bodies including the Institution of Engineering and Technology, the Royal Academy of Engineering, and specialist workforce analytics providers.

The year has been characterised by a fundamental shift in how engineering organisations approach talent development, technological integration, and sustainability commitments. With 90% of engineering professionals now embracing AI coding tools and 61% of organisations reporting increased engineering budgets as a percentage of company revenue year-on-year, the sector has clearly signalled its commitment to innovation and growth. However, this optimism is tempered by persistent concerns about workforce capability, with 76% of engineering employers struggling to recruit for key roles and 36% acknowledging their organisations lack the skills necessary to decarbonise by 2050. These contrasting realities underscore the complexity of the engineering landscape in 2025, where progress and challenge coexist in equal measure.

The Artificial Intelligence Revolution: Adoption and Implications

The integration of artificial intelligence into engineering workflows has emerged as the defining technological trend of 2025, fundamentally altering how engineers approach problem-solving, design, and project delivery. According to the State of Engineering Management Report, 90% of engineering professionals are now embracing AI coding tools, representing a significant leap from previous years and indicating widespread acceptance of AI as an essential component of the engineering toolkit. Remarkably, these tools have delivered tangible results, with organisations reporting a 25% increase in developer velocity and productivity directly attributable to AI coding assistance. GitHub Copilot has emerged as the tool of choice, with 42% of respondents identifying it as their preferred platform, demonstrating the consolidation of the AI tools market around proven solutions.

However, the adoption of AI has been uneven across the sector, revealing important distinctions in how organisations are integrating these technologies. Whilst 58% of engineering employers currently use AI in some capacity, only 18% use it regularly, suggesting that many organisations remain in the experimental phase of AI adoption. Regional variations are particularly pronounced, with just 10% of Scottish engineering employers using AI regularly, compared to 18% in England and 22% in Wales. This disparity highlights the challenges of ensuring equitable access to technological advancement across the UK's engineering sector. Looking ahead, engineers predict that 25% of their work will be handled by AI within five years, a projection that carries significant implications for workforce planning, skills development, and the fundamental nature of engineering roles.

The optimism surrounding AI's potential is palpable, with 61% of employers expecting improvements in productivity and 50% anticipating enhanced problem-solving capabilities. Yet this enthusiasm must be balanced against practical concerns about implementation costs, skills gaps, and the ethical implications of increasing automation. The challenge for the engineering sector as it moves beyond 2025 will be ensuring that AI augments rather than replaces human expertise, and that the benefits of these technologies are distributed equitably across organisations of all sizes and geographical locations.

Skills Crisis: The Defining Challenge of 2025

The skills shortage has intensified throughout 2025, emerging as perhaps the most pressing challenge facing the engineering sector. The data paints a concerning picture: 76% of engineering employers struggle to recruit for key roles, with technical and specialist sustainability skills topping the list of deficiencies. This recruitment crisis is not merely a matter of quantity but of quality and specialisation, with employers finding it increasingly difficult to locate candidates with the precise combination of technical expertise, digital literacy, and sustainability knowledge required for modern engineering roles. The situation is further complicated by the fact that only 61% of employers believe their current workforce is fit for the future, whilst 35% actively disagree with this assessment, revealing a significant confidence gap that threatens long-term competitiveness.

The skills gaps are particularly acute in specific areas. Automation and cyber security both rank as top priorities, with 38% of employers identifying each as critical digital skills needed for growth, followed closely by data engineering at 34% and software engineering at 33%. However, the ability to recruit for these roles remains severely constrained, with 30% of organisations reporting they lack automation skills internally, and 17% struggling to recruit for data engineering, software engineering, and cyber security positions. This mismatch between demand and supply is creating bottlenecks in project delivery and limiting organisations' ability to capitalise on emerging opportunities in digitalisation and sustainable development.

Sustainability skills represent another critical gap, with 39% of employers identifying technical and specialist sustainability skills as most needed, yet 35% simultaneously reporting these as the skills most conspicuously absent from their workforce. This deficiency is particularly troubling given that 36% of organisations acknowledge they lack the skills necessary to decarbonise by 2050, casting doubt on the sector's ability to meet national climate commitments. The barriers to addressing these skills gaps are multifaceted: 50% of employers cite lack of time as an obstacle to upskilling and reskilling initiatives, whilst 46% point to employee turnover as a hindrance to sustained workforce development efforts. These structural challenges suggest that addressing the skills crisis will require more than simply increasing training budgets; it will necessitate fundamental changes to how organisations approach talent development and retention.

Engineering Capability and Global Safety: A Systems Perspective

The publication of the Global Engineering Capability Review 2025 by Engineering X has provided unprecedented insight into the relationship between engineering capacity and safety outcomes worldwide. This world-first analysis of data from 115 geographies has established a direct correlation between coordinated support for engineering skills ecosystems and reduced risk in the engineered environment, offering compelling evidence for the societal value of investing in engineering capability. The Review's findings are sobering: more than a thousand people die every day in accidents at work globally, with occupational accident data showing a worrying increase in the safety gap between low- to middle-income countries and high-income nations. This disparity underscores the urgent need for investment in engineering capacity alongside infrastructure development, particularly in regions where engineering education and professional support systems remain underdeveloped.

The Review introduces two innovative indices that map engineering capacity inputs, including skills, policies, and investment, alongside safety and quality outputs and outcomes. This framework enables policymakers, industry leaders, and educational institutions to assess their region's ability to deliver safe and effective engineering, identifying specific gaps and opportunities for intervention. Particularly concerning is the finding that countries with low engineering capacity, largely low- and middle-income nations, face the greatest risk of poor safety outcomes, suggesting that the benefits of engineering advancement are not being distributed equitably on a global scale. The Review emphasises that where governance, diversity, and partnerships are lacking, the consequences can be particularly detrimental, highlighting the importance of systemic approaches to building engineering capability.

For UK engineering organisations, the Review provides important context for understanding their role in global supply chains and international projects. It reinforces the need for robust knowledge transfer mechanisms, particularly given that whilst 80% of employers report they effectively share knowledge between employees, only 57% feel effective at knowledge transfer with retiring staff. This 23-percentage-point gap represents a significant vulnerability, threatening the loss of critical expertise as experienced engineers reach retirement age. The challenge of preserving institutional knowledge whilst simultaneously adapting to new technologies and methodologies represents one of the sector's most complex workforce management challenges.

The Impact on Hiring

The recruitment landscape in engineering has undergone significant transformation throughout 2025, with hiring trends reflecting both the sector's growth ambitions and its persistent talent acquisition challenges. The median salary for engineering professionals has risen to £42,900, representing a 6.1% increase compared to 2023, a clear signal that employers are willing to compete financially for scarce talent. Regional variations remain pronounced, with London commanding the highest median salary at £45,900, followed by Portsmouth at £45,100 and Bristol at £44,800, whilst cities such as Cardiff and Belfast offer more modest compensation packages at £40,000 and £39,400 respectively. These geographical disparities reflect not only cost-of-living differences but also concentrations of high-value engineering activity and specialised industries.

Recruitment strategies have evolved considerably in response to the challenging talent market. Site engineers command premium salaries ranging from £66,100 to £72,000, reflecting their leadership roles in managing complex projects and the scarcity of professionals with the requisite combination of technical expertise and project management capabilities. Multi-skilled maintenance engineers and maintenance engineers occupy the mid-tier salary range at £43,600 to £45,700 and £42,400 to £44,700 respectively, whilst field service engineers and technicians represent entry and mid-level opportunities at £34,600 to £38,700 and £31,500 to £33,600. This salary structure reveals the premium placed on versatility and specialisation, with multi-skilled professionals particularly valued for their ability to address diverse technical challenges.

Employer branding has become increasingly critical in attracting and retaining engineering talent, with organisations recognising that competitive salaries alone are insufficient to win the war for talent. Job satisfaction metrics provide important insights into what engineers value: 67% express satisfaction with their salaries, whilst an impressive 86% report satisfaction with their benefits packages, which often include enhanced pensions, flexible working arrangements, and performance bonuses. However, significant gaps persist between desired and advertised benefits, with enhanced pensions and sick pay ranking high on employees' wish lists but not universally provided. Remote working options, though growing in demand, remain underrepresented in job postings, with 83% of employers offering flexible work arrangements but 59% of those who do not citing the inability to perform certain roles remotely as justification.

The apprenticeship landscape has shown both promise and limitations in addressing skills shortages. Approximately 51% of employers engage in educational initiatives via apprenticeships, rising to 66% amongst large organisations, demonstrating strong industry-education links particularly amongst employers with greater resources. Around 48% of employers utilise the apprenticeship levy, with 59% retaining more than half of their apprentices after completion, suggesting that apprenticeships can serve as effective talent pipelines when properly structured and supported. However, the forthcoming Growth and Skills Levy presents an opportunity to improve accessibility of funding and potentially increase participation amongst small and medium-sized enterprises, which have historically faced barriers to apprenticeship engagement.

The role of diversity and inclusion in recruitment has gained prominence throughout 2025, with 70% of employers expressing interest in improving workforce diversity, yet only 52% having taken recent action, revealing a significant implementation gap. Large organisations are more likely to offer flexible working arrangements at 87% compared to 79% for SMEs, suggesting that smaller employers may face competitive disadvantages in attracting talent who prioritise work-life balance. Regional variations in diversity focus are notable, with 67% of Scottish engineering employers concentrating their diversity efforts on sex and gender identity, compared to 54% in England. This emphasis on gender diversity reflects ongoing concerns about the underrepresentation of women in engineering, though the relatively modest engagement with school-level STEM programmes—with only 24% of employers sponsoring such initiatives—suggests opportunities remain for earlier-stage talent pipeline development.

Navigating the Future: Strategic Priorities and Opportunities

As the engineering sector looks beyond 2025, several strategic priorities have crystallised that will determine its success in addressing current challenges whilst capitalising on emerging opportunities. The education system's fitness for purpose has come under scrutiny, with nearly half (45%) of engineering employers expressing concern about how well it prepares students for real-world engineering roles. This scepticism varies by region, with 54% of English employers considering their education system fit for purpose despite 76% struggling to find certain skills when recruiting, revealing a complex relationship between educational outputs and industry requirements. The disconnect suggests that whilst the education system may be producing technically competent graduates, gaps remain in practical skills, commercial awareness, and emerging specialisms such as sustainability and advanced digital technologies.

Investment in continuous professional development has become non-negotiable, with 42% of employers ranking innovative thinking as the most vital skill for future growth, ahead of digital and technical expertise at 39%. This shift in priorities toward creativity and adaptability reflects recognition that technical skills alone are insufficient in an environment characterised by rapid technological change and complex, interdisciplinary challenges. Professional registration and certifications such as Chartered Engineer status have gained importance as markers of competence and commitment to professional standards, with institutions like the Institution of Engineering and Technology providing frameworks for continuous learning and career progression.

The sustainability imperative continues to reshape engineering priorities, with technical and specialist sustainability skills simultaneously the most needed and most missing capabilities across the sector. Cost remains the primary barrier to decarbonisation efforts, with 34% of employers citing operating costs and 29% citing investment costs as obstacles. This financial constraint highlights the need for policy support, innovative financing mechanisms, and business model evolution to enable the sector to meet its environmental commitments. The challenge is particularly acute for small and medium-sized enterprises, which may lack the resources to invest in sustainability expertise and technologies without external support.

The quantum computing landscape presents an intriguing case study in regional preparedness for emerging technologies. Only 21% of Scottish engineering employers foresee quantum applications for their business, with just 19% believing their workforce is prepared—the lowest figures in the UK. This suggests that whilst quantum computing remains largely theoretical for most engineering applications in 2025, significant work is needed to build awareness and capability before these technologies achieve mainstream adoption. The disparity also highlights how emerging technologies can create new forms of regional inequality if access to knowledge and skills is not distributed equitably.

Collaboration and partnership have emerged as critical success factors, with the Global Engineering Capability Review emphasising the importance of cooperation between engineers, government, industry, and investors in tackling global challenges safely and effectively. The Review's series of regional and sector-specific workshops aims to support decisionmakers in using data alongside local contexts to develop targeted interventions that improve engineering capability. Five thematic 'Spotlights' addressing AI impact, sustainable energy transition, safe and sustainable mining, end-of-life infrastructure management, and continuous learning culture provide frameworks for addressing specific challenges through multi-stakeholder approaches.

The engineering industry's review of 2025 reveals a sector simultaneously energised by technological possibility and constrained by persistent structural challenges. The widespread adoption of AI tools, increased engineering budgets, and rising salaries demonstrate confidence and investment in the profession's future. However, acute skills shortages, particularly in sustainability and digital specialisms, threaten to limit growth and compromise the sector's ability to deliver on critical national priorities including decarbonisation and infrastructure development. The path forward requires coordinated action across multiple fronts: reforming educational pathways to better align with industry needs, investing in continuous professional development, addressing diversity gaps to expand the talent pool, and fostering the collaborative partnerships necessary to build engineering capability systematically. As organisations and policymakers digest the lessons of 2025, the imperative is clear—engineering's contribution to economic prosperity and societal wellbeing depends upon urgent, sustained action to build the workforce capabilities required for the challenges ahead.