Rising employment costs threaten retail jobs new BRC survey reveals

The retail sector is already under pressure, balancing a fragile economy and low consumer confidence. The implementation of the Employment Rights Act, which came into force in January, could only heighten this pressure, with a new report from the British Retail Consortium (BRC) emphasising particular concern regarding labour costs.

The organisation's survey of retail chief financial officers and finance directors has revealed labour and employment costs to be the top worry for the year ahead, with 84 percent of respondents citing this among their top three concerns. This is 21 percent above sentiments reported in July 2025.

Respondents also cited lower demand (77 percent), rising input costs (39 percent), and the growing tax and regulatory burden (29 percent) as core concerns.

The result of higher employment costs could directly impact unemployment figures. Over 60 percent of CFOs said they would reduce the number of hours or overtime of staff, while 45 percent said they would need to freeze recruitment.

Around half of respondents said they would consider reducing headcount in both the head office and stores. To make up for the smaller workforce, 68 percent would drive higher productivity, while 61 percent are planning to invest in automation.

BRC underlined the importance of the retail sector, yet stated that 74,000 jobs had already been shed over the past year, and more than 250,000 over the last five.

The roll out of the Employment Rights Act, the second legislation of which is ready for consultation, is therefore integral, according to the organisation. New clauses within the act, including guaranteed hours, are raising anxiety among retailers worried that added costs may be on the way as a result.

Helen Dickinson, chief executive at the BRC, said: “Done well, the reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives don’t fit a fixed nine to five pattern.

"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.”