The British retail industry is under increasing pressure as soaring employment costs continue to escalate. With significant rises in the National Living Wage, National Insurance contributions, and the introduction of the Employment Rights Act, retailers are warning of job cuts and reduced working hours. The situation is expected to have a severe impact on young workers, with some companies preparing to eliminate positions altogether.
Retailers have long been a major employer of young people, but as wages rise and businesses face rising costs, many retail bosses are now reconsidering their hiring strategies. The latest findings from the British Retail Consortium (BRC) indicate that 61% of retail finance chiefs plan to reduce staff hours or overtime in response to the rising cost of employing workers. With youth unemployment already at an 11-year high, industry leaders are bracing for further job losses.
The Rising Cost of Employment
According to the BRC, the retail sector has faced a substantial increase in employment costs, driven largely by government policies. In the past year alone, these costs have surged by £5 billion, as employers have had to contend with rising National Insurance contributions and an increase in the National Living Wage. These changes have added significant pressure on businesses, making the cost of employing a full-time, entry-level worker 10% higher.
Retailers are already dealing with this added financial burden, and the prospect of a further rise in the National Living Wage (set to increase by 4.1% in April) has only heightened their concerns. Retail finance directors surveyed by the BRC indicated that the increase in labour costs is now one of their top worries, with 84% ranking it among their three primary concerns. The escalating costs are especially problematic for smaller retailers, who are less equipped to absorb such financial pressures.
The situation is exacerbated by the new Employment Rights Act, which introduces several key changes to employment law, including guaranteed hours and more extensive union powers. While the Act is intended to improve workers’ rights, it also places additional burdens on businesses already struggling with rising costs. According to Helen Dickinson, Chief Executive of the BRC, the combination of increased wages, higher National Insurance, and the Employment Rights Act could ultimately lead to fewer entry-level and part-time roles, particularly for young people whose employment prospects are already under threat.
Impact on Youth Unemployment and Job Prospects
The retail sector, traditionally a major employer for young people, is now facing a difficult dilemma. With youth unemployment already reaching 16.1%, the highest rate in over a decade, many retailers are reconsidering their hiring strategies, fearing that the rising costs will force them to scale back opportunities for younger workers. According to the BRC, the cost of employing 18 to 20-year-olds rose by more than 20% last year, with their hourly rate increasing from £8.60 to £10. This sharp rise has prompted some employers to reassess their commitment to hiring younger, less experienced workers.
The rising cost of employment is hitting young people the hardest. Many businesses are now increasingly reluctant to take on new staff members, particularly those without prior experience, as they become more expensive to employ. This trend is expected to worsen as unemployment among young people continues to climb. According to BRC data, retail has already lost 74,000 jobs in the past year, with more cuts on the horizon. Retailers are worried that the combination of higher wages and rising employment regulations will further reduce the number of available jobs, ultimately harming the most vulnerable in the job market.
While the retail sector grapples with these challenges, industry leaders are urging the government to consider the broader impact of its policies. They warn that without a more balanced approach, the retail industry could face further job losses, with younger workers bearing the brunt of these changes.
