UK retailers are preparing to cut staff hours and jobs as rising employment costs squeeze the sector, a British Retail Consortium (BRC) survey finds. Of the retail finance chiefs surveyed, 52 per cent plan to reduce staff hours or overtime, and 32 per cent expect to freeze recruitment.

Jobs are directly at risk: 48 per cent plan to cut head office roles and 32 per cent plan to cut store roles. To cover the gap, 68 per cent will push productivity and 61 per cent will invest in automation.

The pressure follows a year in which employment costs rose by £5 billion in 2025, driven by higher employer National Insurance contributions and a higher National Living Wage. The BRC calculated that the cost of employing a full-time entry-level worker rose by 10 per cent, and by more than 13 per cent for a part-time worker. A further 4.1 per cent rise in the National Living Wage is due in April.

Confidence has fallen: 69 per cent of finance chiefs called themselves pessimistic or very pessimistic, up from 56 per cent in July 2025, and only 14 per cent were optimistic. Labour costs dominate their worries — 84 per cent ranked them a top-three concern, up from 21 per cent last July — since the Employment Rights Act became law in January.

The sector has already shed 74,000 jobs in the past year and more than 250,000 over five, the BRC said. Chief executive Helen Dickinson said retailers want more high-quality, well-paid jobs, but warned youth unemployment is climbing fast. As the UK's largest private-sector employer, retail's squeeze on hours and hiring looks set to continue into next year. Read the BRC survey findings.