Latest ONS figures indicate that businesses are continuing to reduce their workforce, as the number of pay-rolled employees decreased by 6,000 in July, contributing to a total decline of 142,000 over the year. Initial estimates suggest that there was a further reduction of 8,000 pay-rolled employees in August.
Unemployment continues to creep, now at 4.7% (April to June 2025), with 1.67 million people unemployed. There are now more people looking for fewer available jobs, with a reported 2.3 jobseekers per vacancy. Market expectations point to further unemployment rises further in the months ahead.
Economists and businesses point to the impact of lowering the salary threshold on employers’ national insurance contributions (NICs) last autumn on firms’ ability to hire more workers. A recent survey by the recruitment company, James Reed revealed that 22% of firms said they would be cutting back on hiring because of the rise in National Insurance. Reed said that “we may be facing a hollowing-out of jobs in the same way that we did in the 1980s, except for white collar rather than blue collar workers”.
The Reed survey, headed by the CBI, also revealed that 86% of the respondents believed the UK labour market is a less attractive place to invest and do business compared to five years ago. 54% deemed it being ‘much less’ attractive while 82% said they expected this trend to continue.
The British Chambers of Commerce and industry leaders have called on the government to avoid imposing more damaging taxes on companies. In August, 60 retail CEOs, including the likes of Aldi, Asda, Boots, Tesco, B&Q, Co-op, Kingfisher, Dobbies, Wickes, and trade associations such as the British Retail Consortium and the Horticultural Trades Association, urge the Chancellor to take action as they are no longer able to absorb the increased costs.
ONS data indicates that wages rose by 5.0% (regular earnings (excluding bonuses) and 4.6% for total earnings (including bonuses) over the April to June 2025 period but expert say that the consistent pay growth has not fed through to real wages, only adding to inflationary pressure.
Retail jobs “falling by the wayside”
According to the latest ONS report there were 2.73m jobs in retail in June 2025. The four-quarter average, which smooths out the seasonal variations in hiring, was 2.78m jobs in June 2025, 97,000 fewer than at the same point last year, and 393,000 fewer than in 2015.
On a four-quarter average there were 1.28m full-time and 1.50m part-time jobs. The number of full-time jobs is down 133,000 on a decade ago. Meanwhile, the number of part-time jobs is down 258,000 over the same period.
“Today’s figures are a stark warning: retail jobs have plunged to a record low with 97,000 jobs lost over the last year, and almost 400,000 lost over the last decade. The rising cost of NICs and NLW, together costing the industry over £5 billion this year, are hitting retail employment hard. And worse could be yet to come, with the Employment Rights Bill having a “materially negative impact on employment” according to the OBR, and the threat of further cost rises at the Autumn Budget looming large.
“As costs mount on the industry, retail jobs are falling by the wayside. Whether it is the additional complexity wrought by the Employment Rights Bill, or a new surtax on large retail premises, the impact of these policies will be to drive up prices and hold back retail employment. It vital that the Chancellor’s Autumn Budget does not increase costs to the high street further, or else it will be working people who will pay the price as local, flexible jobs are lost, and the cost of living continues to rise,” said Helen Dickinson, Chief Executive at the British Retail Consortium.
The combination of stagnant living standards and sticky inflation means that people are likely to continue to feel pessimistic about their household finances and curb much needed spending.
