UK retailers plan to cut staff hours as National Living Wage and payroll-tax costs rise

UK retailers are preparing to cut staff hours in response to rising employment costs—an adjustment that doesn’t show up as a layoff headline, but hits workers and customers all the same. A survey by the British Retail Consortium (BRC), reported by the Evening Standard, found 61% of retail CFOs and finance directors plan to reduce hours and overtime. Separately, 55% plan to reduce head office headcount and 42% to reduce store headcount.

The cost shock is policy-driven. The BRC estimates retail employment costs rose by £5 billion last year after increases to employer National Insurance Contributions and the National Living Wage in April. It calculates the cost of employing a full-time entry-level worker rose by about 10%. Another 4.1% rise in the National Living Wage is due in April.

Wage floors and payroll taxes have predictable effects: when government mandates raise the price of labor, firms ration labor. They may not fire people immediately—especially in a tight PR environment—but they will trim hours, reduce overtime, slow hiring, and squeeze headcount through attrition. The result is what looks like “job protection” in political speeches and feels like instability in real life.

The Office for National Statistics has already recorded the sector’s contraction. The Evening Standard notes official data showing UK retail jobs fell by 74,000 to 2.76 million, the lowest level on record, and that retail has lost 250,000 roles over five years. These are not the numbers of a sector enjoying a state-sponsored pay rise.

The timing is difficult for a government that sells labor regulation as a moral upgrade. The same report points to unemployment rising to 5%—a five-year high—and youth unemployment at 16.1% for 16–24-year-olds. Entry-level retail work is one of the few large-scale on-ramps for young people without specialized credentials. Making it more expensive doesn’t create higher productivity by decree; it creates fewer opportunities.

BRC chief executive Helen Dickinson warns that the government’s Employment Rights Act reforms could “make or break job opportunities,” citing proposals on guaranteed hours and union rights. The government, for its part, insists reforms will boost productivity and retention and provide security for over 18 million workers.

“Security” can also arrive as a shorter rota and fewer shifts. Politicians can claim victory in nominal hourly pay while workers discover that the monthly paycheck is what matters—and that it’s the one variable the state can’t legislate into existence.