BRC survey reveals UK retailers’ labour cost fears
A survey by the British Retail Consortium of retail chief financial officers and finance directors has revealed a sharp increase in anxiety about labour costs over the next year.
The research also shows a marked decline in chief financial officer sentiment over the past six months amid weak wage growth, low consumer confidence, and rising business costs. It found concerns have risen sharply since the implementation of the Employment Rights Act, which became law in January.
Subscribe to TRBMore than two-thirds of respondents (69%) described themselves as “Pessimistic” or “Very Pessimistic,” up from 56% in July 2025. By contrast, just 14% said they were “Optimistic,” only slightly higher than 11% last July.
Some 84% of chief financial officers ranked labour and employment costs in their top three concerns, up from just 21% last July. Other significant risks identified included falling demand (77%), rising input costs (39%), and the growing tax and regulatory burden (29%).
The survey found that 61% plan to ‘reduce number of hours/overtime’ of staff, and 45% said they would need to ‘freeze recruitment’. More than half (55%) are planning to ‘reduce head office headcount’ and 42% to ‘reduce stores headcount’. Meanwhile, retailers will work on making up for a smaller workforce by ‘driving higher productivity’ (68%) and ‘investment in automation’ (61%).
The results come as the BRC has calculated that the cost of employing a full-time entry-level worker and part-time worker rose by 10% and 13% respectively in 2025 due to increases to employer National Insurance Contributions and a higher National Living Wage.
As secondary legislation for the Employment Rights Act goes out for consultation, the BRC said retailers fear that several clauses within the new Act – such as on guaranteed hours – could add significant cost and complexity for retailers, while reducing job flexibility and employment opportunities.
Helen Dickinson, chief executive at 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.
“We all want more high-quality, well-paid jobs. But retail has already lost 250,000 roles in the past five years, and youth unemployment is climbing fast. The Employment Rights Act is the biggest shakeup of employment rules in a generation, and how it is delivered will make or break job opportunities.
“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 9-5 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.”
