Retailers are looking to cut staff hours (Image: Getty)
Industry bosses have warned that rising employment costs are pushing retailers to consider reducing staff hours and in some cases cutting jobs entirely. New research from the British Retail Consortium (BRC) shows that 61% of retail finance directors and CFOs (chief financial officers) plan to cut employee hours or overtime. Many are also exploring reductions in head office and shop-floor roles to manage increasing costs.
Last year, employment costs for retailers rose by £5 billion due to higher employer National Insurance contributions and a rise in the National Living Wage, making the cost of a full-time, entry-level worker 10% higher, according to the BRC. Another National Living Wage increase of 4.1% is scheduled for April this year.
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Retail employment costs increased by £5 billion in 2025 (Image: Getty)
The sector lost 74,000 jobs last year, leaving 2.76 million positions, according to the Office for National Statistics (ONS). This is the lowest level on record.
According to the ONS, the unemployment rate reached 5.2% in the three months to December 2025, the highest level in nearly five years. Young people are bearing the brunt with unemployment for 16 to 24-year-olds climbing to 16.1%, the highest it’s been in over a decade.
The BRC survey indicates further cuts may be coming, with 55% of firms planning head office reductions and 42% looking to reduce store staff. Overall, 69% of retail leaders describe their outlook as pessimistic or very pessimistic.
Helen Dickinson, Chief Executive at the BRC, 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.
« The Employment Rights Act is the biggest shake-up of employment rules in a generation, and how it is delivered will make or break job opportunities.
« Done well, the reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives don’t fit a fixed nine-to-five pattern.
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« If the Government fails to consider business needs on policies including guaranteed hours and union rights, they 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 said: « We know retailers are facing a difficult time, but our employment rights act 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. »
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