Retail warns of high price for workers from government costs ahead

Retail Jobs at Risk as Cost Pressures Mount, Warns Industry Body

Retail workers face reduced hours and potential job losses as employers grapple with rising government-imposed costs, according to the British Retail Consortium (BRC).

The industry group said a survey of finance directors found growing pessimism across the sector, with 61% planning to cut staff hours and overtime.

It also reported that:

• 55% believe head office roles are at risk

• 42% expect in-store jobs to be targeted

This comes after 74,000 retail jobs were already lost over the past year.

Labour Costs “Shot Up the Agenda”

The BRC said anxiety about labour-related costs has surged since the phased introduction of new employment laws.

Retailers have long cited higher operating costs since the pandemic, but concerns intensified following the 2024 budget. According to the BRC, increases to employer national insurance contributions and minimum wage rises since April have added £5bn annually to the sector’s costs.

The group estimates:

• The cost of employing a full-time entry-level worker has risen by 10%

• For part-time workers, costs have increased by 13%

Further minimum wage rises, above the rate of inflation, are expected this April.

Rising Unemployment Concerns

The findings add to broader labour market worries. The UK unemployment rate has climbed to 5.2% — more than a percentage point higher since Labour came to power — the highest level in almost five years.

Youth unemployment stands at 16.1%, its highest rate since 2014, while private-sector pay growth has weakened.

Amid reports the government was reviewing its pledge to align minimum wages for younger and older workers, Prime Minister Keir Starmer ruled out any reversal.

“We’ve made commitments to young people in our manifesto, and we will keep to those commitments,” he said, confirming that the living wage will increase in April as planned.

High Street Pressures

Retailers are also facing subdued consumer spending, as ongoing cost-of-living pressures weigh on both essential and discretionary purchases. The combination of weaker demand and rising wage costs has fuelled concerns about the long-term health of UK high streets.

BRC chief executive Helen Dickinson said:

“We all want more high-quality, well-paid jobs. But retail has already lost 250,000 roles in the past five years, and youth unemployment is climbing fast.”

She warned that if the government’s Employment Rights Act does not reflect business needs — particularly on guaranteed hours and union rights — it could “add complexity and reduce flexibility”, potentially limiting entry-level and part-time opportunities.

A government spokesperson acknowledged that retailers are facing challenges but said the reforms are intended to boost productivity, improve retention, and provide job security to over 18 million workers. Ministers also pledged further engagement with the sector ahead of publishing a High Streets Strategy later this year.

With costs rising and consumer demand under pressure, the outlook for retail employment remains uncertain in the months ahead.