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Retailers say rising employment costs are making it harder for young people to get their first job
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Tesco, Sainsbury's and John Lewis blame government, say it's now hard to "hire youngsters"
Jun 10, 2026
- Retail bosses including Tesco, Sainsbury's and John Lewis have urged ministers to lower the cost of hiring young workers.
- The number of young people not in work, education or training has risen above one million for the first time since 2013.
- Businesses say higher National Insurance costs, wage increases and employment reforms are discouraging recruitment.
Britain's biggest retailers have warned that government policies are making it increasingly difficult to hire young workers, as youth unemployment climbs and the number of young people outside work and education reaches its highest level in more than a decade.
More than 80 business leaders, including executives from Tesco, Sainsbury's, John Lewis, Amazon, Marks & Spencer and Greggs, have written to prime minister Keir Starmer calling for urgent action to tackle what they describe as growing barriers to entry-level employment.
The intervention comes as official figures show that 1.01 million people aged between 16 and 24 were not in employment, education or training during the three months to March, marking the first time the figure has exceeded one million since 2013.
The warning also follows an interim review led by former Labour minister Alan Milburn, which suggested the number could rise to 1.25 million within the next five years without stronger intervention.
The cost of a first job
The retailers argue that a combination of higher National Insurance contributions, repeated increases to the National Living Wage and planned employment rights reforms is raising the cost of recruitment at a time when businesses are already under pressure.
In a letter coordinated by the British Retail Consortium (BRC), employers said ministers need to revisit policies that increase hiring costs if they are serious about reducing youth unemployment.
Retail remains one of the UK's biggest entry points into the labour market, accounting for almost a quarter of all youth employment. For many young people, a supermarket, high street shop or distribution centre provides their first experience of paid work.
Business leaders argue that those opportunities are becoming harder to create.
"The message from retail is clear: if government is serious about tackling youth unemployment, it cannot keep making it more expensive to create jobs," Helen Dickinson, chief executive of the British Retail Consortium, reportedly said.
She added that retail plays a unique role in providing flexible and entry-level jobs but warned that the first step on the employment ladder was "cracking under the weight of government-imposed costs and regulations", as quoted in a news report.
The industry's concerns come as ministers face mounting pressure to address the growing number of young people disconnected from both work and education.
Last week, the government appointed former Marks & Spencer chief executive Marc Bolland to help develop solutions aimed at improving employment opportunities for younger people.
Retail leaders are now calling for a closer partnership with ministers, including the creation of a joint government-retail taskforce focused on improving pathways into employment.
Among their recommendations are measures to lower the cost of employing younger workers and ensuring that future employment and skills reforms do not unintentionally discourage businesses from hiring inexperienced candidates.
The sector argues that such reforms are particularly important after losing around 400,000 jobs over the past decade, reducing some of the traditional routes through which young people entered the workforce.
Government points to support package
The government has defended its approach, pointing to a wider programme of support aimed at helping young people secure employment.
A government spokesperson reportedly said ministers were already working with businesses to create 50,000 additional opportunities through a £2.5 billion youth employment support package.
The spokesperson added that from June, employers would be able to access payments of up to £3,000 to help cover six months of wages for people who have been out of work for extended periods. The government is also seeking to reduce hiring costs for under-21s and apprentices.
Ministers have said they will continue working with businesses to address concerns raised in the Milburn review and improve access to employment for younger people.
For retailers, however, the immediate concern is straightforward. While government and business may agree on the goal of getting more young people into work, they remain divided over whether current policies are making that task easier or harder.
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