Retail bosses warn of cuts to staff hours due to employment costs | Personal Finance | Finance

Industry bosses have warned that rising employment costs are prompting retailers to consider cutting staff hours and, in some cases, cutting jobs altogether. New research from the British Retail Consortium (BRC) shows that 61% of retail finance directors and CFOs plan to reduce employee working hours or overtime. Many are also exploring reductions in head office and shop floor roles to manage rising costs.

According to the BRC, employment costs for retailers increased by £5bn last year due to higher employer National Insurance contributions and an increase in the National Living Wage; This made the cost of a full-time, entry-level employee 10% higher. A further increase of 4.1% to the National Living Wage is planned for April this year.

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 in history.

The unemployment rate reached 5.2% in the three months to December 2025, the highest level in nearly five years, according to the ONS. Young people bear the brunt of the increase in the unemployment rate for those aged 16-24 to 16.1 percent, the highest level of the last decade.

The BRC survey shows that 55 percent of companies plan to reduce head office and 42 percent plan to reduce store staff. Overall, 69% of retail leaders describe their outlook as pessimistic or very pessimistic.

BRC Chief Executive Helen Dickinson said: “We all want better quality, well-paid jobs.

“But retail has lost 250,000 roles in the last five years and youth unemployment is rising rapidly.

“The Employment Rights Act is the biggest change to employment rules in a generation, and how it is implemented will make or break job opportunities.

“When implemented well, reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives do not follow a fixed nine-to-five.

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“If the government does not take business needs into account in policies, including guaranteed working hours and trade union rights, this will increase complexity and reduce flexibility, ultimately eliminating entry-level and part-time opportunities at exactly the moment when the country needs them most.”

A Government spokesman said: “We know retailers are going through a difficult time, but our employment rights law reforms will improve productivity and retention in workplaces across the UK and provide job security for more than 18 million workers.

“We are also supporting retailers through our small business plan and will be working with businesses, including the BRC, to see what further support we can provide before publishing our High Streets Strategy later this year.”