The cost of employing people into entry-level jobs leapt by over
10% today for retailers across the country, and by a massive 13%
for those working part-time. This is a result of the double
whammy of costs hitting the industry with today's rise in
National Insurance Contributions (NICs) coupled with last week's
increase to the National Living Wage.
Higher National Living Wage and changes to employer NICs will
together cost the retail industry over £5bn a year, rising to
£7bn when the new packaging tax (Extended Producer
Responsibility) comes into force in October 2025.
The changes to the NIC threshold, which fell from £9,100 to
£5,000, means many more part-time and entry level jobs will now
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” (, Work and Pensions Secretary). Part-time jobs play an
important role in supporting people back into work, 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 NIC's 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 British Retail
Consortium suggested that a further 160,000 part-time retail
roles – more than 1 in 10 – were at risk of being lost in the
next three years.
Costs of employing staff on National Living Wage (including
employer NICs and pensions)
Helen Dickinson, Chief Executive of the British Retail
Consortium, said:
"The Chancellor's October Budget is now hitting retailers with an
extra £5bn on their employment bill. When coupled with the new
packaging tax in October, retailers' costs will have spiralled by
£7bn 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.”
-ENDS-
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