Retail Giant CEO Warns Tax Changes Could Hurt Entry-Level Jobs

Retail giant Next’s CEO, Lord Wolfson, has warned that recent changes in National Insurance (NI) announced in the UK government’s latest Budget will make it harder for people to enter the workforce, especially in low-wage sectors.

In an interview, Lord Wolfson said the rise in employer-paid National Insurance contributions would hit the retail sector particularly hard and lead to job cuts, reduced hours, and fewer opportunities for entry-level employees.

The government’s decision to raise the rate of National Insurance for employers and lower the threshold at which they begin paying it from £9,100 to £5,000 will take effect in April 2025.

Alongside this, the government is also raising the National Living Wage at double the rate of inflation, further increasing costs for businesses, particularly those with large numbers of low-paid or part-time workers.

Lord Wolfson, a Conservative peer, argued that these changes would disproportionately impact employers in retail and similar industries, where many workers are employed on lower wages and part-time contracts.

“The axe has fallen particularly hard on entry-level jobs,” he said, pointing out that the tax increases would cause Next’s wage bill to rise by £70 million.

This significant financial burden will force the company to make tough decisions, including reducing employee hours or cutting staff altogether.

He emphasized that while the increase in National Insurance for high-earning individuals is modest—around 2% for a £60,000-a-year worker—the increase for low-paid workers earning the National Living Wage could be as high as 6.5%.

“So the pain is going to be felt the most by those in entry-level, National Living Wage jobs,” Lord Wolfson added.

In response to the concerns raised by Lord Wolfson and other business leaders, a Treasury spokesperson defended the Budget measures, stating that the government’s primary objective was to “wipe the slate clean” and deliver stability to businesses.

They argued that the changes were necessary to maintain fiscal responsibility and ensure that the UK economy remains resilient in the long term.

However, Lord Wolfson has called for the government to reconsider the timing of the tax increases, suggesting that they should be phased in gradually rather than implemented all at once in April.

He believes that this would give businesses more time to adapt and adjust their operations without having to resort to layoffs or reducing working hours.

The retail sector, which has already been struggling with challenges such as rising inflation and supply chain disruptions, is expected to bear the brunt of these tax changes.

Lower-paid workers, many of whom are in their first jobs, could see their prospects for entering the workforce further diminished if companies are forced to scale back hiring or reduce working hours.

With economic uncertainty continuing to affect businesses across the UK, the government will likely face increasing pressure from industry leaders like Lord Wolfson to reconsider the impact of these tax changes.

As the April deadline approaches, the debate over the long-term effects on employment in the retail sector is set to intensify.