Many retailers in the UK are planning to reduce staff and close down stores due to rising employment costs.
This is according to a survey conducted by the British Retail Consortium (BRC), which represents most large retailers in the United Kingdom.
More than two-thirds of retail CFOs surveyed said they felt ‘pessimistic’ or ‘very pessimistic’ following the 2025 Budget, with labour market concerns dominating their worries.
84% of those surveyed said labour and employment costs were among their top three concerns, slightly ahead of falling demand.
A majority of retailers plan to reduce the number of hours worked by staff, and 48% said they planned to reduce head office headcount. 32% of those surveyed said they also planned to reduce the number of stores they operate.
Many retailers who planned to reduce headcount said they would make up for this loss by driving higher productivity and investing in automation.
The BRC cited last year’s increases to National Insurance contributions and a higher National Living Wage as key factors in this widespread consideration of job cuts and store closures.
According to its calculations, the cost of employing a full-time entry-level worker rose by 10% due to these factors, and by 13% for part-time workers.
The trade body noted that retail is the largest private-sector employer in the UK, but it has lost 74,000 jobs in the past year, and more than 250,000 jobs in the last five years.
It said that retailers were also concerned about the secondary legislation for the Employment Rights Act now under consultation, which would provide guaranteed hours to workers, amongst other changes.
“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,” said BRC chief executive Helen Dickinson.
“The Employment Rights Act is the biggest shakeup 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 9-5 pattern,” she said.
“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.”
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