National minimum wage (NMW) changes are leading almost a third of UK retailers to reduce entry level roles with almost half looking to recruit experienced hires instead, RSM UK Workforce survey shows.
As changes to the National Minimum Wage (NMW) are introduced from April 2026, bringing the younger age band closer to the main National Minimum Wage rate, research from RSM UK has found 48 per cent of retailers will recruit more experienced hires as a result, while 29 per cent plan to reduce the number of entry level roles. The findings suggest young people may find it even harder in future to find a job.
Chris Robson, Employment Tax Partner and Fair Pay Lead at RSM UK said: “With around one in eight 18-24 year-olds not currently in education, employment or training the results paint a worrying picture, suggesting the job market is about to get even tougher for those trying to find their first step on the career ladder. Future plans to bring in one standardised NMW rate could have unintended consequences, becoming a further disincentive for recruiters to hire younger inexperienced staff.”
Jacqui Baker, partner and head of retail at RSM UK, added: “Around a quarter of young people start their careers in the retail sector, which is more than any other industry – demonstrating the acute impact a reduction in entry level retail roles could have on the job prospects for young people.”
RSM UK’s findings also suggested retailers are likely to make changes to existing staff work patterns in response to the NMW changes. Around a third of retailers (31 per cent) said they would reduce the number of hours their employees work, 30 per cent would limit staff overtime and over a quarter (27 per cent) said they would make reductions to their workforce.
Baker added: “It’s not surprising that retailers are adapting to offset the sharp rise in staff costs whilst maintaining customer experience but limiting this gateway into the workforce for young people not only further elevates employment costs for retailers, but it could also exacerbate the youth unemployment risk.”
The findings come as nearly 400 recruiters, including some household names in retail, have been named in the press recently for underpaying their staff. These companies now face penalties totalling £7.3m for failing to pay staff the NMW.
From 7 April this year, the new Fair Work Agency will have powers to issue employers, including retailers, with 200 per cent penalties for NMW underpayments. It will also start holding employers to account on other previously un-enforced employment rights such as holiday and sick pay.
Robson continued: “Given the impending Fair Work Agency powers, holiday pay compliance will now present a similar risk and needs to be view through a similar lens as NMW compliance. Holiday pay has gone under the radar with little enforcement in the past, and therefore less attention from payroll system providers, and those writing policies and contracts.
“The goal posts have moved, and non-compliance now brings greater reputational and financial risk, so retailers need to ensure policy and processes are robust.”
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