Britain’s high street is sounding the alarm. The country, traders warn, is heading for a generation locked out of work, as the Chancellor’s Tax and Pay decisions are blamed for squeezing the quality jobs young people rely on to start their careers.
In a powerful intervention, the British Retail Consortium (BRC) has called on Rachel Reeves to stop what it describes as the relentless rise in recruitment costs. The trade body estimates that the combined impact of large employer National Insurance contributions and rising minimum wages added nearly £6.5bn to tradesmen’s wage bills in the last financial year alone, a sum, the BRC reads, which is now translating directly into frozen hiring, reduced rotas and dwindling opportunities at the bottom of the ladder.
Helen Dickinson, chief executive of the BRC, did not mince her words, accusing ministers of allowing rising employment costs and redtape to keep young workers out of the labor market. Opportunities, he said, are disappearing in real time as businesses absorb the level of price increases that many small producers cannot pass on to consumers.
The political climate is unforgiving. BRC polling by Opinium suggests that 49 per cent of the public believe Labor should do more to help young people out of work, a surprise for a government already grappling with questions about its handling of the wider economy. In March, ministers extended a scheme that offers taxpayer-funded subsidies to firms employing under-25s who have been claiming benefits for more than six months. Traders, however, consider the move as well-intentioned but underwhelming given the scale of the crisis now plaguing the sector.
The numbers tell their own story. Data from the Office of National Statistics shows that more than nine million people aged 16 to 64 were economically inactive between December and February, unemployed and unwilling, an unemployment rate of 21 percent. Vacancies have fallen by 18 percent since workers took office in July 2024, equivalent to about 156,000 jobs disappearing from the economy. The pain is concentrated in those industries, retail, tourism and leisure, which have given school leavers their first taste of work.
For Britons under 25, the squeeze is bad. The unemployment rate for 16- to 24-year-olds reached 15.8 percent in the three months to February, triple the unemployment rate of 4.9 percent. Behind that number sits a generation of Saturday job applicants, gap-year workers and graduate hopefuls who find doors quietly closed before they even get a chance to knock.
Adding to the concern is the rapid arrival of artificial intelligence in the office environment. A survey by the Institute for Student Employers found that nearly nine out of ten employers expect AI to reshape entry-level hiring, with nearly a third expecting significant changes in the way they hire young workers. Tourism and the legal profession are among the sectors expected to feel the impact first, raising the prospect of a double squeeze: rising employment costs on the one hand, technology displacing graduate roles on the other.
The government has regressed. Peter Kyle, the Business Secretary, says the Budget strengthened the economy and put 332,000 more people into work than last year. Ministers insisted that the minimum wage increase was a legitimate request for families struggling with the cost of living. For SME owners who are watching their wage bills rise and their receipts soften, it’s a protection that keeps falling short.
The deep danger, as Dickinson’s warning makes clear, is structural. If a group of young people miss that crucial first hit, the replacement of part-time shops, the warehouse weekend, the graduation program, the economic and social costs of holding them back can add up for decades. For Britain’s SMEs, the question now is not whether the Chancellor will get the message, but whether he will act before the damage becomes too severe to reverse.
