The British Retail Consortium (BRC) has reported a significant rise of above 10% in the expense of employing entry-level retail staff following an increase in National Insurance contributions (NICs) and the UK’s National Living Wage.
Part-time workers have been particularly affected, seeing a 13% cost increase.
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The retail sector is bracing for an annual financial impact exceeding £5bn ($6bn) due to the changes, with projections reaching £7bn upon the implementation of the Extended Producer Responsibility packaging tax in October 2025.
The adjustment to the NIC threshold, which has dropped from £9,100 to £5,000, brings more part-time and entry-level positions within the tax net, potentially discouraging businesses from creating such roles.
The government is simultaneously introducing welfare reforms to assist capable individuals find employment.
BRC chief executive Helen Dickinson stated: “The Chancellor’s October [2024] Budget is now hitting retailers with an extra £5bn on their employment bill. When coupled with the new packaging tax in October [2025], retailers’ costs will have spiralled by £7bn in a single year. Given slim retail margins of just 2 to 4%, these additional costs mean higher prices, fewer jobs and fewer stores. A recent survey of retail finance directors showed that half were planning to reduce hours and workers as a direct result of the employer NIC hike.
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By GlobalData“It will be part-time jobs which take the biggest hit. While the cost of employing someone in a full-time entry-level position rose by over 10%, for a part-time worker it is over 13%.”
According to data from the Office for National Statistics (ONS), part-time roles in retail, which amounted to 1.5 million last year, will now incur an additional 13.5% cost for retailers based on a 15-hour workweek.
This represents the lowest figure for part-time retail employment on record.
The BRC also cautions that up to 160,000 part-time retail jobs could be eliminated up to 2028.
Dickinson added: “Part-time retail jobs hit their lowest level since records began in 1996, and have fallen by 200,000 in the last seven years. This matters: a local, flexible retail job is a vital stepping stone for many people, whether it’s a first job out of school or a part-time role for someone returning to the workforce or with caring responsibilities. While the government’s welfare reforms aim to increase the numbers in work, this week’s cost increases will kick away the ladder for many who are just getting their first foothold.”
