Retail giant Next has sounded the alarm over what it claims is a growing “crisis” in youth employment, as businesses grapple with rising costs and sweeping new employment laws introduced by Labour.
Lord Wolfson of Aspley Guise, the chief executive of Next plc, warned that entry-level jobs are rapidly disappearing, with young workers bearing the brunt of the slowdown.
The Tory peer blamed Chancellor Rachel Reeves’s £25 billion increase in employer National Insurance contributions, alongside above inflation rises to the minimum wage, for squeezing retailers and forcing them to cut staffing levels.
Speaking to the BBC, Lord Wolfson said the number of people applying for shop floor jobs at Next had nearly doubled in just two years, rising from 10 applicants per role to 19.
He said: “That doubling of applicants for shop jobs is indicative of just how big the crisis is in youth unemployment at the moment.”
Official figures show unemployment among 16 to 24-year-olds has climbed to 16.2 per cent, the highest level recorded in more than a decade and more than three times the wider UK unemployment rate.
Lord Wolfson urged ministers to reconsider the rise in employer National Insurance, introduced in Labour’s first Budget after taking power in 2024. He argued the policy, combined with mounting wage pressures, had led to a sharp reduction in entry-level opportunities across retail.
The Next boss has previously said government policies have added around £70 million a year to the company’s wage bill. He claimed retailers were now employing fewer people in stores as a result.
He also criticised Labour’s new Employment Rights Act, championed by Deputy Prime Minister Angela Rayner, warning it could make hiring even harder.
Under the reforms, zero-hours contracts will be restricted and employers will have to offer staff guaranteed minimum weekly hours.
Retailers fear the changes could limit flexibility during busy trading periods such as Christmas, because workers who temporarily increase their hours may then be entitled to retain those hours throughout the year.
Labour has defended the legislation, insisting the reforms will provide workers with greater security and tackle what it describes as exploitative working practices.
The Employment Rights Act also introduces a range of day-one rights for employees and reduces the qualifying period for unfair dismissal claims from two years to six months.
Alice Martin, head of research at The Work Foundation, said the changes were “long overdue”.
She said: “One in five workers in the UK is in severely insecure work, without predictable pay or basic protections.”
Ms Martin also challenged claims that the legislation was behind the rise in youth unemployment, noting that many of the measures have yet to take effect.
She said: “These reforms have not yet come into force, so blaming current hiring trends on them is misplaced.”
Lord Wolfson, however, argued the policies formed part of a wider package that was damaging confidence and slowing the economy.
Britain’s economy grew by 0.6 per cent in the first quarter of the year, up from 0.2 per cent previously, although some economists warned the increase may not reflect underlying strength.
Meanwhile, the International Monetary Fund recently downgraded its forecast for UK economic growth, warning Britain remained vulnerable to rising global energy prices.
Lord Wolfson said younger workers were often the first to suffer when hiring slows.
“Youth unemployment is really a symptom of wider problems with employment in the economy,” he said. “If you’ve got fewer jobs, the people who suffer most are the people with the least experience and that is the youngest.”
Businesses in retail and hospitality have repeatedly warned that higher taxes and labour costs disproportionately affect sectors employing large numbers of minimum wage workers.
Lord Wolfson also revealed that Next is increasingly investing in automation, including self service return lockers, allowing the company to operate stores with fewer till staff.
A Treasury spokesman defended the Government’s approach, saying higher minimum wages had boosted earnings for younger employees and noting that employer National Insurance rates are lower for under-21s.
“Cutting wages for the lowest paid during a time of global uncertainty is not the answer,” the spokesman said.
A spokesman for the business department added that the Budget measures had helped stabilise the economy while supporting households and firms.
The spokesman also took aim at Lord Wolfson personally, saying the executive, who earned more than £7 million last year, “will understand just how important our measures to make work pay are for the financial and job security of working people.”
