Retailers in UK plan to cut staff hours and jobs amid rising employment costs

UK retailers are planning to cut staff hours and jobs amid rising employment costs and pessimism about the economy.Almost two-thirds (61%) of finance bosses at retail companies said they planned to reduce working hours or cut overtime, according to the latest survey from the British Retail Consortium (BRC), the trade body that represents most big retailers. More than half (55%) said they would cut head office jobs and 42% said they would reduce jobs in stores.The potential job cuts are likely to add to pressure for political action on work for young people who are particularly affected by the lower availability of entry-level jobs in retail and hospitality.The retail sector has shed 74,000 jobs in the past year partly owing to new technology, from AI marketing and stock management tools to automated tills.Retailers said they planned to implement more technology and other productivity tactics to reduce labour requirements after employment costs rose by £5bn in 2025, according to the BRC, as a result of increases in employer national insurance contributions and a higher legal minimum wage.Retail stores are also under pressure from cut price online competitors such as Shein, Vinted and Temu, as well as lacklustre demand, with households managing higher energy and food bills and trying to save more amid employment concerns and an uncertain geopolitical environment.The BRC survey found 69% of retail finance bosses were “pessimistic” or “very pessimistic” about the outlook, up from 56% in July last year. Only 14% were “optimistic” – although that was up from 11% in July.Helen Dickinson, the chief executive of 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.”She said that 84% of finance bosses ranked labour costs among their top three concerns: a huge rise from 21% in July.“The economy is expected to remain fragile, with weak wage growth, unemployment rising and low consumer confidence, all pointing towards falling demand. At the same time, businesses face sharply higher costs, from rising input prices and wage bills to new burdens created by government policy.”Dickinson said the finer details of the employment rights bill, which will gradually introduce new protections for workers from April over the next few years, “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. 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.”