Retailers blame cost squeeze for job cuts as national living wage and apprenticeship levy take toll

Helen Cahill
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Consumers In The Christmas Eve Retail Rush
The number of retail jobs fell by 1.5 per cent in the second quarter (Source: Getty)

Beleaguered retailers slashed an estimated 45,000 jobs in the second quarter on the back of costs associated with the national living wage and the apprenticeship levy.

A survey by the British Retail Consortium (BRC), out today, reveals that the number of jobs in the industry fell by 1.5 per cent in the second quarter compared to the same period a year ago.

More pain is expected as inflation heaps further costs onto the retail sector, which employs nearly 3m. A quarter of retailers responding to the BRC’s survey said they would consider further cuts to hours and employee numbers to survive additional rises in costs.

Helen Dickinson, chief executive of the BRC, said the figures showed retailers were responding to changes in government policy by trending towards having fewer, but more productive, employees.

The new losses, exacerbated by costs arising from a weaker sterling, come after around 65,000 job cuts were made in the first quarter, when job numbers fell by 2.2 per cent.

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“We expect to see hours and employment continue to fall. Fifteen per cent of retailers in the survey are expecting to reduce employment levels in the next quarter, compared to none in the second quarter of 2016,” the BRC said.

“With consumers seeing inflation squeezing their spending power, the challenges facing retailers will only increase in coming months; reinforcing the pressure on retailers to rethink and restructure their workforce,” Dickinson added.

Independent retail analyst Richard Hyman agreed retailers were likely to keep shedding jobs for years.

“There is a strong whiff of panic about,” he said. “This is the most difficult retail market anyone has ever seen. Retailers need to sit down with their stakeholders and explain the reality that they can’t deliver the same as they used to.”

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The deep cuts in the second quarter were necessary despite retail sales growing by 2.7 per cent in the quarter, the industry body said, boosted by the late timing of Easter.

Falling consumer confidence is predicted to weigh on retail sales during the second half of the year.

Retailers also continued to open shops despite the wider challenges in the economy. Store numbers grew by 3.6 per cent in the quarter.

Hyman said the rise in stores was surprising due to the increasing importance of online retailers, and that businesses expanding their store estate might find “it’s a bit of a noose” in future.

Read more: Be under no illusions: The National Living Wage will cost jobs

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