Retail Sector Warns of Job Cuts from Government Costs, Survey Reveals
The British Retail Consortium (BRC) has issued a stark warning that retail workers face reduced hours or job losses as businesses grapple with escalating government-imposed costs. According to a new survey by the industry lobby group, growing pessimism among finance chiefs is driving plans to slash labor expenses, exacerbating a crisis that has already seen 74,000 jobs cut in the past year.
Survey Highlights Deepening Pessimism
The BRC's survey of finance chiefs in the retail sector uncovered alarming trends. 61% of respondents are planning to reduce the number of hours and overtime for staff, while 55% see head office workers at risk and 42% target in-store roles. This surge in anxiety comes despite significant job losses over the past 12 months, with the sector having shed 250,000 roles in the last five years.
Mark Kleinman, Sky's City editor, notes that the findings risk worsening unemployment concerns. The UK's jobless rate has surged by more than a percentage point to 5.2% since Labour came to power, a level not seen for almost five years. Youth unemployment stands at 16.1%, its highest since 2014, and pay awards across the private sector have weakened.
Government Costs and Economic Pressures
The BRC attributes the crisis to rising employer national insurance contributions and minimum wage hikes imposed since last April, which have added £5bn annually to the sector's costs. These expenses have harmed investment, pay awards, and employment. The cost of employing a full-time entry-level worker has risen by 10%, with part-time workers seeing a 13% increase.
At the same time, continuing cost of living pressures have reduced both essential and discretionary spending among consumers, fueling fears over the future of UK high streets. Businesses, especially in big employment sectors like retail, have complained of higher costs since the pandemic, but concerns intensified after the 2024 budget.
Political Response and Future Outlook
The government faces mounting pressure as the BRC warns of another increase in labor costs this April due to further minimum pay rises above inflation. The Times reported this week that the government is reviewing its pledge to equalize minimum wages between younger and older workers, aiming to avoid additional pressure on youth unemployment. However, Sir Keir Starmer has ruled out a U-turn, confirming that the living wage will rise this April as promised in the manifesto.
BRC chief executive Helen Dickinson emphasized the need for balanced policies. "We all want more high-quality, well-paid jobs," she said, but warned that the government's flagship Employment Rights Act could "add complexity and reduce flexibility" if it fails to consider business needs on policies like guaranteed hours and union rights. This, she argued, could strip away entry-level and part-time opportunities when they are most needed.
A government spokesperson acknowledged retailers "are facing a difficult time" but defended the reforms as boosting productivity and retention for over 18 million workers. The spokesperson added that support is being provided through the small business plan and collaboration with the BRC ahead of the High Streets Strategy later this year.
