Next boss warns of sharp decline in entry-level job opportunities
Lord Wolfson, chief executive of Next, has highlighted a significant drop in entry-level job opportunities in the UK, pointing to a doubling in the number of applicants for retail roles over the past two years. Speaking to the BBC, he said this increase reflects a deepening crisis in youth unemployment.
Why this matters
The rise in applicants per job signals growing difficulties for young people seeking their first roles, which can have long-term effects on their career prospects and economic stability. Entry-level jobs in retail and hospitality often provide essential work experience for young workers, and a decline in these opportunities could exacerbate youth unemployment rates, which are already notably higher than the general population.
Key developments
- Two years ago, Next received about 10 applicants per shop job; now it receives 19.
- Lord Wolfson described this doubling as indicative of a “big crisis” in youth unemployment.
- He warned that upcoming legislation banning zero-hours contracts will make hiring more difficult for retailers.
- Next has reduced staff numbers in physical stores but expanded its online business.
- The retailer is increasingly using automation, such as self-scanning lockers, to manage costs and staffing.
Impact of government policies
Lord Wolfson criticized recent government policies, including increases in National Insurance rates for employers and rises in the minimum wage, arguing these have raised Next’s wage bill by £70 million annually and constrained the company’s ability to create lower-paid, part-time jobs.
He called on the government to reverse the National Insurance hike and minimum wage increases, emphasizing that economic growth is the main solution to improving the jobs market.
In response, a Treasury spokesperson highlighted that raising the national minimum wage has benefited over 200,000 young workers and that employer National Insurance contributions are lower for hiring under-21s. The government also pointed to a £2.5 billion youth employment support package aimed at delivering a million opportunities nationwide.
A Department for Business and Trade spokesperson noted that the government’s Budget has helped stabilize the economy and provide support for families and businesses.
Youth unemployment context
The unemployment rate for 16 to 24-year-olds stands at 16.2%, the highest since 2014 and more than three times the general unemployment rate of 5%. Entry-level roles in retail and hospitality are often the first jobs for young people, including students, making these sectors critical for youth employment.
Challenges for retailers
Retailers like Next face challenges from increased taxes, wage costs, and legislation affecting flexible contracts. Lord Wolfson explained that the ban on zero-hours contracts, part of the Employment Rights Act, will complicate scheduling because retailers cannot afford to guarantee the same hours year-round due to seasonal fluctuations.
He said this could reduce opportunities for workers seeking extra hours, such as students during holidays, and negatively impact customer service.
The Trades Union Congress responded that the policy is popular and designed to provide workers with more predictable hours without affecting holiday jobs, aiming to improve job security for those on variable hours.
Next’s business performance
Despite these challenges, Next has shown strong business performance. The retailer recently raised its full-year profit expectations to £1.2 billion, with sales up 6.2% in the first quarter. Next has expanded by acquiring brands like Joules, Fatface, Cath Kidson, and Made.com, employing over 30,000 people.
Lord Wolfson emphasized that making a profit is essential for business survival and rejected suggestions that Next prioritizes shareholders over workers. He noted that dividends are distributed among many modest savers, with the average payout around £300 per individual.
What to watch
Future developments to monitor include the impact of the zero-hours contract ban on retail staffing and youth employment, government responses to calls for tax and wage policy changes, and how Next and similar retailers balance automation with job creation. Additionally, broader economic growth driven by reforms in planning, energy, and transport policies could influence the availability of entry-level jobs.
Lord Wolfson’s recommendations
Lord Wolfson urged the government to focus on boosting overall economic growth by reforming planning laws, energy policies, and transport infrastructure. He highlighted the disparity in land prices with and without planning permission as a barrier to development and economic expansion.
He argued that removing these constraints could accelerate economic growth and improve employment prospects, particularly for young people entering the workforce.
Recommended reading
For more context, see related Peack News coverage and explainers linked below.
