Over the last five years, the UK retail industry has seen a substantial reduction in employment, cutting 225,000 jobs, according to the Office for National Statistics (ONS).
- This trend includes 40,000 fewer jobs than the previous year, reflecting ongoing restructuring within the sector.
- Key factors behind this decline include enhanced automation, a sharper focus on productivity, and the increased outsourcing of logistics and warehousing.
- Rising employment costs, with wages increasing by 8.5% in 2024, have compounded the issue.
- The recent Budget introduces further pressure with higher National Living Wage and employer NI contributions, likely accelerating job cuts.
In a detailed analysis of the UK retail sector’s employment trends, recent data from the Office for National Statistics (ONS) has unveiled a striking reduction of 225,000 jobs over a five-year period. This decline underscores the ongoing transformation within the industry, driven by technological advancements and changing economic conditions.
The average number of jobs has dropped by 40,000 compared to the previous year, indicating a persistent downward trajectory in retail employment. This transformation is attributed to several key factors, notably the adoption of automation and a greater emphasis on enhancing productivity. Additionally, the shift towards outsourcing tasks such as warehousing and logistics, which are not fully captured in the ONS figures, has further contributed to these changes.
BRC CEO Helen Dickinson highlighted the dual influence of technological progress and economic pressures on the retail sector. Despite the reductions, she reaffirmed that retail remains the largest private sector employer, providing approximately 2.9 million jobs directly, with an additional 2.7 million in the supply chain. However, Dickinson pointed out that rising employment costs have exacerbated job losses, with pay growth in the industry surpassing the national average.
Employment costs are a significant concern, with wages in the retail sector experiencing an increase of 8.5% in 2024 alone, and a total rise of over 25% since 2021. The recent October Budget has introduced further financial burdens by increasing the National Living Wage by 6.7%, adding over £2.7 billion to wage bills, while changes to employer National Insurance contributions are expected to cost the industry an additional £2.3 billion. These factors are poised to expedite job reductions, particularly affecting part-time roles that have already been declining in recent years.
Retailers are adjusting to these pressures by boosting investments in automation and striving for higher worker productivity. However, these measures are not without consequences, with the potential to reduce job availability and hours, impacting communities that rely on retail for essential entry-level employment opportunities. The situation is compounded by recent controversies regarding the employment of young, festive season staff without proper rights, as observed in major retail organisations.
The UK retail industry’s employment landscape continues to evolve, facing significant challenges due to economic and technological pressures.
