Retail warns of high price for workers from government costs ahead

Retail staff face reduced hours or even losing their job as bosses continue to face up to rising government-imposed costs, according to an industry lobby group.

The British Retail Consortium (BRC) said its survey of finance chiefs in the sector found 61% were planning to reduce the number of hours and overtime for staff.

The body reported that 55% saw head office workers at risk while 42% were to target in-store roles amid a surge in pessimism on the outlook, despite 74,000 jobs already being cut over the past 12 months.

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The BRC said its study revealed a sharp rise in anxiety about labour-related costs, concerns that it said had "shot up the agenda" since the phased implementation of new employment laws got under way.

The survey's findings risk exacerbating the growing sense of crisis over unemployment, with the UK's jobless rate surging by more than a percentage point to 5.2% since Labour came to power.

It's currently at a level not seen for almost five years.

The official figures have also shown youth unemployment at 16.1% - its highest figure since 2014 - and weaker pay awards across the private sector.

Businesses, especially in big employment sectors such as retail, have complained of higher costs since the pandemic, but their concerns have intensified since the 2024 budget.

The BRC said raised employer national insurance contributions, coupled with minimum wage hikes, imposed since last April, had added £5bn annually to the sector's costs, harmed investment, pay awards and employment.

It calculated that the cost of employing a full-time entry-level worker rose by 10%, while that number rose to 13% for someone part-time.

At the same time, continuing cost of living pressures have harmed both essential and discretionary spending among consumers, exacerbating fears over the future of UK high streets.

PM rules out minimum wage U-turn

The BRC said its members faced another increase in labour costs this April due to further minimum pay rises above the rate of inflation.

The Times reported this week that the government was reviewing its pledge to equalise, over time, the minimum wage between younger and older workers, to avoid placing further pressure on youth unemployment.

But Sir Keir Starmer later ruled out a U-turn, arguing: "We've made commitments to young people in our manifesto, and we will keep to those commitments, including the commitment that we would make sure that the living wage would go up this April, which I can absolutely confirm to you will happen."

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BRC chief executive Helen Dickinson said of its report: "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."

If the government's flagship Employment Rights Act fails to consider business needs on policies like guaranteed hours and union rights, she warned, it will "add complexity and reduce flexibility, ultimately stripping away entry-level and part-time opportunities at precisely the moment the country needs them most".

A government spokesperson acknowledged retailers "are facing a difficult time", but said the reforms "will boost productivity and retention in workplaces across the UK and give job security to over 18 million workers".

"We are also supporting retailers through our small business plan, and we will work with business including the BRC to see what further support we can provide ahead of publishing our High Streets Strategy later this year," they said.

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