The deepening 'Black Hole' – 300,000 retail jobs reportedly at risk

Media reports have picked up on the recently formed Retail Jobs Alliance's comment that over 300,000 jobs could be at risk in the retail sector by 2028.

This startling prediction could significantly impact not just those individuals at risk but businesses, communities and the UK economy at large. This comment has come off the back of major cost pressures being placed on retail businesses, including increases to National Insurance Contributions (NIC) and National Minimum Wage (NMW) rates from April 2025.

Economic consequences of 300,000 retail job losses

The scenario of 300,000 jobs being lost could have catastrophic consequences for raising funds for the Exchequer. The calculation below shows, at a high level that potentially close to £2bn will be lost, without even considering the wider cost pressures this puts on the country (e.g. unemployment etc).

Step 1 - Calculating the Annual Pay: £12.21 x 40 hours x 52 weeks = approximately £25,400

Step 2 - Calculating the Income Tax payable: £25,400 - £12,570 =£12,830 x 20% = £2,566

Step 3 - Calculating the employee NIC payable: £25,400 - £12,570 =£12,830 x 8% = £1,026

Step 4 - Calculating the employer NIC payable: £25,400 - £5,000 =£20,400 x 15% = £3,060

Step 5 - Calculating the total tax/NIC payment across to HMRC: £3,060 + £1,026 + £2,566 = £6,652

Step 6 - Calculating the total tax/NIC for 300,000 workers: £6,652 x 300,000 = £1,995,600,000

How businesses can protect retail jobs

There are certain ways businesses can look to save costs and protect jobs, including:

• Implementing salary sacrifice for pension, cars, additional leave, cycle to work, but being mindful of the NMW interactions
• Looking at putting more individuals aged under 25 on apprenticeships given this will reduce the employer NIC bill
• Considering if a TRONC arrangement can save NIC where tips and gratuities are received (one for the hospitality sector)
• Assessing shift patterns and opening hours
• Thinking about how to automate, and digitise the retail experience further to reduce “on-the-ground costs”
• Looking at what can be outsourced and how to manage “IR35” risks potentially associated with this
• Considering options around vehicle fleets, car allowances and expenses when travelling on business
• Looking at longer-term incentives to defer costs
• Modelling future workforce scenarios to help navigate further cost pressures and workforce challenges

Protecting jobs will be a major uphill struggle and balancing act given the cost pressures on multiple fronts that go beyond the well-publicised NMW and NIC rate increases. Many retailers will be weighing up whether to absorb these increased costs or to maintain their profit margin by passing on price rises to consumers. Retailers need to review their employee reward strategies to both control costs but also incentivise staff to meet strategic objectives.

Get in touch

If you’d like to speak with our retail specialists regarding rising costs in your sector, please do not hesitate to get in touch. We can support you with NIC and NMW queries, tax efficiencies and workforce planning using our offering PeopleXplore.

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