The latest data from the UK Office for National Statistics (ONS) indicates that as of September 2024, the retail sector employed 2.81 million individuals as employers turn to outsourcing, automation amid rising costs and industry transformation.

This period typically marks the annual low in employment figures, which generally rebound in anticipation of the holiday season. 

Comparing year-over-year data, there has been a reduction of 40,000 jobs, and a more pronounced decline of 225,000 jobs when looking back five years. 

The analysis corroborates this downward trend, highlighting a contraction in the retail workforce from 3.1 million to just under 2.9 million since 2019.  

British Retail Consortium chief executive Helen Dickinson said: “Despite a further fall in the number of retail jobs, the industry remains the largest private sector employer providing approximately 2.9m jobs in the UK, with another 2.7m in the supply chain. The current fall is partially explained by ongoing transformation in the industry, from increased investment in automation and higher productivity, to a shift to outsourcing of warehousing and logistics that are not all captured by the ONS retail figures. 

“Meanwhile, costs of hiring have risen significantly in recent years. Pay growth in the industry was well above the national average at 8.5% in 2024, and up over 25% since 2021.” 

The Autumn Budget unveiled by Chancellor of the Exchequer, Rachel Reeves, on 30 October, introduced key revisions to employer National Insurance contributions: 

– A hike in National Insurance rates by 1.2 percentage points, raising it from 13.8% to 15%. 

– A reduction in the earnings threshold for National Insurance applicability from £9,100 to £5,000. 

– An increase in the Employment Allowance to £10,500 from £5,000 allows eligible employers to offset their National Insurance costs up to this new limit. 

These adjustments mean that an employee earning minimum wage full-time will see an annual increase in National Insurance costs of approximately £770. Meanwhile, those earning a median salary of £33,000 will face an increase of about £900 annually. 

The implementation of these changes is scheduled for April 2025 with the commencement of the new fiscal year.  

Dickinson added: “The October Budget increases the National Living Wage by a further 6.7%, adding over £2.7bn to retailer wage bills from April 2025, while changes to rate and threshold for employer NI contributions will cost the industry over £2.3bn. This could hasten the reduction in retail jobs and particularly affect the recruitment of part-time roles, which have been declining recently.” 

Dickinson further stated: “Retailers are responding to the changing business landscape, with most saying they will further increase investment in automation and improve worker productivity. It is inevitable that the Budget will also put pressure on jobs and hours in the coming year, potentially affecting communities all over the UK that rely on retail as a vital provider of entry-level, local jobs.” 

In terms of sales performance, BRC-KPMG’s retail sales monitor indicated a year-on-year decrease of 3.3% for November 2024 UK retail sales.