The growth of online shopping and higher wage bills could contribute to the loss of 900,000 jobs and the closure of tens of thousands of shops from Britain's retail sector over the next decade, according a new report published by the British Retail Consortium (BRC).
The warning from the ‘Retail 2020 Fewer But Better Jobs' report comes a month ahead of the introduction of the National Living Wage (NLW) by the UK government, when all employees aged above 25 years will have to be paid a minimum of £7.20 an hour. This is expected to be increased to £9 an hour by 2020.
The report found that store closures on UK high streets and town centres could worsen the impact on employment in already economically fragile communities, with weaker regions most vulnerable and low paid staff at risk. Similarly, smaller businesses are also likely to be disproportionately affected by the ongoing change in the industry.
Rising costs due to the National Living Wage and the new apprenticeship levy could quicken job cuts. While both have been welcomed, the report warns the two changes could fail on implementation. It estimates that the National Living Wage coming into force this April will cost an estimated £3bn annually – a cost that has been underestimated.
The retail sector employs three million people – a number that could fall by a third by 2025. The report found that the percentage of staff on low pay has almost doubled to 60% since 1990, with critics saying sector has relied for too long on paying low wages.
Fewer, more productive and better paying jobs
Sir Charlie Mayfield, Chairman of the British Retail Consortium, told the BBC that although the number of jobs would fall dramatically, the jobs that are left would be more productive and pay would be higher. He added that the services to customers are also likely to improve and prices fall.
Sir Charlie said: “I do very much believe that persistent low pay needs to be tackled, which is why we’re talking about fewer but better jobs.
“What the Living Wage does is that it increases that pace at which wages will rise and by the way that’s not a bad thing, it’s in many ways a very good thing – but it will also probably accelerate some of the changes within the workforce and the responses that retailers make in order to mitigate some of the rising cost pressure that they’re seeing.”
Government should manage impact on vulnerable people
While the primary responsibility for managing impact rests with the industry, the report highlights that Government is also a key player. It makes a number of recommendations to manage the impact of the changes in regions and on the most vulnerable people. The report recommends:
- Rebalancing tax policy by reforming the business rates system
- Clarifying and strengthening the Low Pay Commission over the National Living Wage
- Giving employers discretion over the spend of the apprenticeship levy.
A Treasury spokesperson spoke in favour of the NLW and said it would create more jobs. He added: "We are already seeing record employment rates and more people in employment than ever before. And taking into account the National Living Wage, the independent Office of Budget Responsibility expects employment to rise by a further 1.1m by 2020.”
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Source: British Consortium press release - Fewer but better retail jobs in the future: managing the impact on people and places (link no longer available).