The cost of employing people into entry-level jobs leapt by over +10% today for retailers across the country, and by +13% for those working part-time, as a result of the costs hitting the industry with today’s rise in National Insurance Contributions (NICs), coupled with last week’s increase to the National Living Wage, reports the British Retail Consortium (BRC).
Higher National Living Wage and changes to employer NICs will together cost the retail industry over £5b a year, rising to £7b when the new packaging tax (Extended Producer Responsibility) comes into force in October 2025, adds the consortium – the changes to the NIC threshold, which fell from £9100 to £5000, means many more part-time and entry-level jobs will be captured by the tax, reducing the incentive for many businesses to offer them.
This comes as the Government implements its new welfare reforms aimed at “helping people who can work to do so”. Part-time jobs play an important role in supporting people back into work, says the BRC, allowing people to work the hours they feel able to do: "Unfortunately, such roles would now cost businesses +13.5% more (based on 15 hours per week), as changes to employer NICs disproportionately affect flexible and entry-level roles.
"According to the most recent ONS data, there were 1.5 million part-time jobs in retail in 2024, the lowest on record, and down 200,000 since 2018. A recent analysis by the BRC suggested that a further 160,000 part-time retail roles – more than one in 10 – were at risk of being lost in the next three years.
BRC chief executive Helen Dickinson says: "The Chancellor’s October Budget is now hitting retailers with an extra £5b on their employment bill. When coupled with the new packaging tax in October, retailers’ costs will have spiralled by £7b in a single year. Given slim retail margins of just 2-4%, 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.
“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%. 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.
“Retailers have spent the last five months preparing for the consequences of these new costs on their businesses. While there will be an impact on employment, the Government must consider how its future policies can mitigate this, making it easier for businesses to employ people. This includes ensuring the Employment Rights Bill improves workers’ rights without hampering job creation at this crucial time.”
Furniture News looks at the issue from the retailer's perspective in April's issue.
