Retailers Warn Rising Labour Costs Are Reducing Youth Job Opportunities

Retailers across the UK are warning that rising labour costs and changes to employment rules are making it harder to create entry level jobs for young people, as youth unemployment continues to climb.

New polling published by the British Retail Consortium (BRC) found that almost half of the public (49 per cent) believes unemployed young people need more support from the government to help them into work.

The findings come as official figures show unemployment among 16 to 24 year olds has risen to 16 per cent, with around 713,000 young people currently out of work.

The retail sector has traditionally been one of the biggest sources of flexible and entry level jobs for students, school leavers and young workers. According to the BRC, the industry employs around 2.8 million people across the UK, including approximately 780,000 workers aged between 16 and 25.

However, retailers say the cost of employing staff has risen sharply in recent years. Businesses have faced increases to the National Living Wage, higher employer National Insurance contributions and lower thresholds for contributions.

Many retailers are now looking for ways to reduce spending as they face weaker consumer demand, rising operating costs and growing competition from online shopping and automation. Recent industry surveys suggest some businesses are planning to cut overtime, reduce staff hours and remove certain in-store and head office roles during 2026.

The BRC’s research also found that 53 per cent of people support reducing costs and hiring requirements for employers who take on workers under 25, while only 7 per cent disagreed. Concern about youth unemployment was strongest in Wales, where nearly two-thirds of respondents said more support was needed for younger people struggling to find work.

Retail leaders and labour market experts have warned that young people are increasingly finding it difficult to secure their first job or gain valuable work experience. Separate research from the Institute for Public Policy Research found fewer than half of young adults felt prepared for the workplace after leaving education.

The industry has backed schemes such as the government’s Youth Guarantee programme and the proposed Youth Jobs Grant, which are designed to increase apprenticeships, training opportunities and work placements for students and other younger job seekers.

Retail groups are also raising concerns about planned changes under the UK Employment Rights Act, arguing that some reforms could unintentionally reduce the flexible and part time roles often relied on by students and young workers.

Business organisations say there is now growing pressure on both employers and policymakers to create clearer pathways into work for young people, particularly as the number of people not in education, employment or training continues to rise across the UK.

Commenting on the findings, the Chief Executive Officer of British Retail Consortium, Helen Dickinson, said:

“Opportunities for young people are disappearing in front of our eyes. The reasons are clear: hiring is more expensive and businesses costs are soaring. The public want decisive action by government to get people, particularly young people, back into work. This is critical for their future and the future of our economy.”

“Instead we see government pushing up the cost of hiring, from last year's National Insurance hike to poor implementation of parts of the Employment Rights Act. We are sleepwalking towards a jobless generation unless government halts the upwards spiral of employment costs and red tape,” added the CEO.