Retail chiefs warn of fresh job losses as Labour prices people out of work

Eleanor Harmsworth

Thu, February 19, 2026 at 3:30 PM GMT+9 3 min read

Retailers are preparing to cut more jobs as Labour’s tax and employment policies price people out of work.

More than half of retail chiefs are planning to reduce headcount because of concerns around labour costs, according to a new report from the British Retail Consortium (BRC).

The findings will fuel concerns about the emerging youth unemployment crisis as shops are traditionally one of the biggest employers of young people.

A survey of finance chiefs by the BRC found 55pc were planning to cut head office jobs, while 42pc were preparing to reduce shop floor roles.

The lobby group blamed anxiety about the Employment Rights Act, Labour’s flagship workers’ rights reforms, which hands staff more rights from day one on a job and greatly empower unions. It follows recent inflation-busting increasing in minimum-wage, which had already pushed up employment costs.

Helen Dickinson, the chief executive of the BRC, said: “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.”

Ms Dickinson added: “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.”

It comes a day after government data showed youth unemployment jumped to an 11-year high, with economists blaming Labour’s policies for fuelling the problem.

The jobless rate among 16 to 24-year-olds now stands at 16.1pc, according to data from the Office for National Statistics.

The rising cost of staff is a significant worry for retail bosses, with 84pc ranking it in their top three concerns – a dramatic increase from 21pc last July.

The BRC estimated that Labour’s decision to increase employer National Insurance rates last April, alongside successive increases in the minimum wage, had added £5bn to the sector’s wage bill by last year.

The lobby group calculated that the cost of employing a full-time, entry-level worker had risen by 10pc last year, while for a part-time worker it rose by over 13pc. Some 74,000 jobs have already been lost in the retail sector over the past year.

Several clauses within the new Employment Rights Act, especially on guaranteed hours, stand to add significant extra costs and complexity for retailers.

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Andrew Griffith MP, the shadow business secretary, said: “It will come as no surprise to anyone that this Government’s terrible decisions are driving down staff hours and killing opportunities for tens of thousands of people in the retail sector.”

Other business groups echoed the BRC’s warning.

Alex Hall-Chen, at the Institute for Directors (IoD), said: “A perfect storm of policies via the Employment Rights Act, above-inflation increases to the National Living Wage and last year’s increase in employer National Insurance contributions have significantly weakened the business case for hiring staff.

“This effect is particularly pronounced for the employment of individuals who represent a bigger risk, for example, due to a lack of experience, which is hitting young people’s employment prospects particularly hard.”

Kate Shoesmith, the director of policy at the British Chamber of Commerce, said businesses across the economy were reining in recruitment, cutting training and delaying investment.

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