A recent industry study indicates that over 40% of retailers are considering laying off employees, in addition to the 250,000 jobs lost on the high street in the last five years.
As per the survey conducted by the British Retail Consortium, store owners are contemplating reducing staff, cutting working hours, and halting new hires due to escalating employment expenses. The negative forecast is partially attributed to the surge in national insurance costs for employers, effective since April last year following the 2024 Budget announcement.
Simultaneously, there was an increase in the national living wage for many low-wage workers. The study, which involved CFOs and finance directors in the retail industry, revealed that 69% of respondents are either pessimistic or very pessimistic about the future, a rise from 56% in the previous year.
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Only 14% of respondents expressed optimism. When asked about their concerns for the upcoming year, 84% highlighted labor and employment costs as one of their top three worries, a sharp increase from 21% in the previous year. Furthermore, 61% of businesses are planning to reduce staff hours or overtime, while 45% anticipate a freeze in recruitment.
The potential job cuts extend to head office and store positions, with 55% planning to downsize head office employees and 42% considering reducing store staff. Retail, being the largest private sector employer in the country, has already eliminated 74,000 jobs in the past year and over 250,000 in the last five years, as highlighted by the BRC, emphasizing the importance of how the Employment Rights Act is implemented.
The looming threat of further job losses in the retail sector follows the recent collapse of prominent chains like Russell & Bromley and Quiz. Helen Dickinson, the BRC chief executive, voiced concerns over the fragile economy, citing weak wage growth, rising unemployment, and low consumer confidence as factors contributing to diminishing demand.
“Businesses are facing heightened costs, including escalating input prices and wage bills, alongside new regulatory burdens, posing challenges to job creation. Despite the desire for quality, well-paid positions, the retail sector has already witnessed a significant loss of jobs over the last five years, with a notable increase in youth unemployment,” said Dickinson.
“The Employment Rights Act represents a substantial overhaul of employment regulations, and its effective implementation will determine the availability of job opportunities. “If executed effectively, the reforms can enhance standards while supporting flexible and entry-level roles crucial for individuals with non-traditional work schedules.
“However, a failure to consider business requirements in policies such as guaranteed hours and union rights could lead to added complexity, reduced flexibility, and