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Hundreds of thousands of retail and hospitality employees are struggling to secure the work hours they need, as businesses cut back on hiring amid higher employment costs, according to research published by Retail Economics and Legion Technologies.
More than 300,000 workers are ‘underemployed’, meaning they are willing to take on extra hours but are unable to do so.
Recent policy changes implemented by chancellor Rachel Reeves have seen a significant increase in tax pressures, having an impact on the hiring and retention of staff. Earlier this year, The British Retail Consortium (BRC) warned that as a result, one in 10 part-time retail jobs could be axed.
Labour’s changes to employer National Insurance contributions (NICs) have added approximately £26bn a year in additional costs for employers, due to rate increases and a lower threshold. In addition, the law requires employees to offer statutory sick pay and adhere to contracted hours, piling on unattainable pressure. As a result, companies have taken to relying on fewer staff and fewer hours.
Richard Lim, chief executive at Retail Economics, said: “Retail and hospitality are carrying a significant amount of hidden labour friction, challenging whether frontline models are stable, responsive and efficient enough to make better use of the workforce already inside it.”
The report comes as Legion Technologies found in its 2025 annual report that an average of 63% of hourly employees plan to leave their jobs within the next 12 months and among younger workers (18–24), that number jumps to 79%. However, experienced workers leaving the sector could cost up to £6.7bn due to the expense of replacing them and lost productivity while staff are trained.
Helen Dickinson, chief executive of the BRC, warned earlier this year: “…poorly designed changes to guaranteed hours could make it harder – not easier – for businesses to offer part‑time work, discouraging employers from creating the very roles young people, students, parents and carers all rely on. As the Government consults on the Act, the priority must be clear: protect workers and protect job creation.”
