Lord Wolfson, the chief executive of retail giant Next, has issued a stark warning about a significant decline in entry-level job opportunities across the UK. He told the BBC that just two years ago, Next typically received 10 applicants for each position in its stores, a figure that has now surged to 19. "That doubling of applicants for shop jobs is indicative of just how big the crisis is in youth unemployment at the moment," Lord Wolfson stated.
He also pointed to the upcoming ban on zero-hours contracts, set to take effect next year, as a factor that will further complicate hiring processes for businesses. The government has previously described such contracts as "exploitative" and has argued that its Employment Rights Act aims to end "one-sided flexibility" by ensuring a "baseline" of security and predictability for employees.
Lord Wolfson, a Conservative peer, urged the government to reconsider its recent increase in the National Insurance rate for employers, as well as rises in the minimum wage. However, he emphasized that sustainable economic growth is the primary solution for revitalizing the job market. "Youth unemployment is really a symptom of wider problems with employment in the economy, and of course, if you've got fewer jobs, the people who suffer most are the people with the least experience and that is the youngest," the chief executive explained.
In response, a Treasury spokesperson highlighted that the increase in the national minimum wage has benefited over 200,000 young workers. The spokesperson also noted that employer National Insurance contributions are reduced when hiring individuals under the age of 21. "Cutting wages for the lowest paid during a time of global uncertainty is not the answer," the spokesperson added, referencing a £2.5 billion youth employment support package intended to "deliver a million opportunities across the country."
A spokesperson for the Department for Business and Trade, who noted that Lord Wolfson's earnings were £7 million last year, stated that the government's Budget has been instrumental in stabilizing the economy and providing support for families and businesses. Despite these government assurances, concerns are mounting regarding the employment status of young people.
Latest official figures reveal that the unemployment rate for individuals aged 16 to 24 stands at 16.2%. This figure represents the highest rate recorded since 2014 and is more than triple the general unemployment rate of 5%. High street retailers and hospitality businesses, such as restaurants, cafes, and pubs, traditionally serve as crucial entry points into the workforce for many young individuals, particularly those still engaged in secondary and further education.
However, businesses, including Next, have voiced concerns that increased employer taxes and higher minimum wages are hindering their capacity to create new roles, especially in lower-paid, part-time positions. Sluggish economic growth also plays a role, often leading businesses to postpone investment and hiring decisions.
Lord Wolfson indicated that due to rising operational costs, Next has reduced the number of staff in its physical stores, while its online division continues to experience robust growth. He has previously stated that government policies have led to a £70 million annual increase in Next's wage bill. The retailer is increasingly adopting automation and other technologies, such as self-scanning lockers for customer returns, as an alternative to staffing traditional tills.
Next is recognized as a prominent success story on the high street, demonstrating an ability to adapt and evolve while many of its historical competitors have faltered. The company has acquired several brands that have faced difficulties in recent years, including Joules, Fatface, Cath Kidson, and Made.com, and now employs over 30,000 people across its various businesses. Earlier this month, Next revised its full-year profit forecast upwards to £1.2 billion, following a 6.2% increase in sales during the first quarter.
Lord Wolfson refuted any suggestion that Next prioritizes shareholders over its employees. He explained that the perception of a company making a billion pounds often overlooks the reality of public ownership. "When people talk about a company making a billion pounds, they assume that that's somehow a person with a billion pounds in their pocket and they must be very, very rich. But the nature of public companies is that we are owned by hundreds of thousands of savers whose savings are often very modest," he stated. "The average dividend we'll pay out to an individual saver will be around £300 a year."
He reiterated his criticisms of the government's Employment Rights Act, warning that certain provisions would make it significantly more challenging for Next to offer additional hours to its staff. One of the reforms mandates that employers offer guaranteed hours to casual workers, aiming to reduce reliance on zero-hours contracts. While Lord Wolfson expressed agreement with phasing out zero-hours contracts in most sectors, he argued that the new regulations pose difficulties for the retail industry. "Because the risk is you then have to contract for those hours forever," he said. "You can't afford to… have the same number of people in your shop in February as you have in and around Christmas," the Conservative peer elaborated. "That's going to be bad news for our colleagues who want extra hours, particularly students who, in holiday time, need extra hours, and of course bad news for customers because service won't be as good."
Conversely, the Trades Union Congress (TUC) has described the policy as "hugely popular" and stated that the right to a regular-hours contract, based on a reference period of several months, will help to "even out peaks and troughs" without negatively impacting holiday employment. A TUC spokesperson added, "This will give insecure workers on variable hours security in their working lives which they are so badly lacking at the moment."
Instead of concentrating solely on youth unemployment, Lord Wolfson suggested that the government should prioritize reforms in planning laws, energy policy, and transport networks to stimulate broader economic growth. He called for the government to release more land for development, noting that the cost of an acre of agricultural land in the southeast of England, approximately £15,000, can escalate to as much as £1.5 million with planning permission. "All of these things are holding the economy back and if government could just take its foot off the brakes, we could have a much, much faster growing economy," he concluded.
