Next boss warns of ‘dramatic decline’ in UK entry-level jobs | economics

The boss of Next has sounded the alarm over a ‘sharp decline’ in the number of new jobs that is fueling youth unemployment in the UK, saying the retailer is now receiving twice as many applicants for each role as it did two years ago.

Lord Wolfson said the clothing and homewares chain, of which he has been chief executive since 2001, would normally receive 10 applications for every job at its stores in 2024, but that number had now risen to 19.

He told the BBC: “The doubling of applications for shop jobs shows just how big the youth unemployment crisis is.”

Wolfson’s comments come as a government-commissioned report is expected to find Labor has failed to tackle the burgeoning number of people not in education, employment or training (Neet) and must begin a “system reset” that could include a new attempt to overhaul health and disability benefits.

Alan Milburn, who is leading the review into why almost a million young people are NEETs, said ministers had so far responded with a series of disjointed jobs programs rather than a cohesive strategy.

Wolfson said recruitment would become more difficult when the ban on zero-hours contracts, included in the government’s Employment Rights Act, comes into effect from next year.

In the UK, more than a million people work on zero-hours contracts in a variety of sectors, from hospitality and warehouses to the NHS. Hundreds of thousands of people are on zero-hours contracts despite working for the same employer for many years, according to the TUC.

Technology is having a huge impact on jobs, and new employees are the most vulnerable to the advent of artificial intelligence. Next is increasingly using automation and other technology, such as self-scanning lockers, to allow customers to return items rather than having an employee at the checkout counter.

Wolfson, who was handed a record pay package worth more than £7 million last year, has called on the government to reverse increases in the National Insurance Contribution (NIC) employers must pay, along with a rise in the minimum wage.

The Conservative peer could receive up to £9.27m this year after Next announced plans to increase his base pay and bonuses. Earlier this month, the retailer raised its full-year profit expectations to £1.2 billion, with first-quarter sales up 6.2%.

A Treasury spokesperson said: “At a time of global uncertainty, cutting wages on the minimum wage is not the answer. Raising the national minimum wage would raise the wages of more than 200,000 young workers and lower employer NICs if they employ anyone under the age of 21.”

Traditionally, young people often spend their first week gaining experience in a shop stocking shelves or serving drinks and food in a restaurant, café or pub. Wolfson said Next’s individual stores had fewer employees due to rising costs, but its online business thrived.

Employment rights laws require employers to provide guaranteed working hours to temporary workers. Wolfson said this would make it “much more difficult” for Next to provide more hours to its employees.

He said he was in favor of scrapping zero-hours contracts in most sectors, but said the new rules were tough on retail. “Because then you run the risk of having to contract forever for that time.”

However, the TUC said the right to a regular working hours contract “will be set on the basis of a reference period spanning several months equalizing the peaks and troughs” and would not affect holiday jobs.

Alice Martin, head of research at the Work Foundation at Lancaster University, said: “Young people are entering one of the toughest labor markets in years, facing fierce competition for fewer and fewer entry-level jobs.

“Retail and other sectors are changing rapidly. Online sales are increasing and fewer workers are needed on the shop floor. This has resulted in a sharp decline in vacancies and many young people being repeatedly rejected when trying to find work.

“But a difficult labor market is no excuse for undermining wages or job security. A ban on exploitative zero-hours contracts is long overdue. One in five UK workers is in seriously precarious work without predictable wages or basic protections. These reforms have not yet been implemented, so it would be wrong to blame them for current employment trends.”

Ultimately, Wolfson suggested, the best way to improve the job market is through economic growth.

“Youth unemployment is actually a symptom of wider employment problems within the economy. Of course, if there are fewer jobs, the people who suffer the most are those with the least experience – the youngest,” he said.

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