Young workers could be among the biggest victims of the government’s new workers’ rights legislation. Retailers warn the reforms could worsen Britain’s growing youth unemployment problem.
Industry leaders say the Employment Rights Act, which recently received royal assent, could prompt employers to reduce flexible and entry-level roles as companies adapt to higher employment costs and tougher regulations. The British Retail Consortium (BRC) argues that the changes could inadvertently limit the opportunities of younger workers, who often rely on part-time or flexible jobs as a first step into working life.
The warning comes as youth unemployment in the UK continues to rise. According to official forecasts, overall unemployment could reach 5.3 percent this year, while unemployment among younger people has already reached its highest level in more than a decade.
Former Labor health secretary Alan Milburn, who is currently leading a government-commissioned inquiry into youth employment and inactivity, has described the situation as an “existential crisis” for the UK and highlighted the scale of the challenge facing policymakers.
Retail leaders fear the new employment rules could discourage companies from offering the kind of flexible roles that many younger people rely on.
The legislation introduces a number of significant workplace reforms, including giving workers on zero-hours or low-hours contracts the right to request guaranteed working hours. It will also introduce entitlement to statutory sick pay from day one, shorten the qualifying period for protection against unfair dismissal and make it easier for workers to secure union recognition.
While the government argues the measures will improve job security for millions of workers, the BRC says they could impose additional costs and administrative burdens on employers, particularly in industries that rely heavily on flexible staffing models.
Retailers are warning that if companies respond by reducing hiring or restricting flexible contracts, entry-level positions may be the first to disappear.
“Local, flexible workspaces are important first steps into working life for young people across the country,” said Helen Dickinson, chief executive of the British Retail Consortium. “Whether it’s a Saturday job related to studies or shifts alongside caregiving duties, these roles are valued and appreciated by many.”
She added that with youth unemployment already rising, policymakers must ensure reforms address poor employment practices without neglecting opportunities for younger workers to enter the labor market.
Retail plays a crucial role in providing early employment opportunities for younger people.
According to industry data, about 780,000 retail jobs are filled by workers between the ages of 16 and 25, representing about 28 percent of the industry’s workforce.
These roles often include part-time shifts, weekend work or seasonal employment, which may be combined with education, training or other commitments.
A survey commissioned by the BRC found that 70 percent of people aged 18 to 29 think flexible working hours are important, and this figure rises to almost three quarters of part-time workers.
In comparison, only 52 percent of adults overall rated flexible working as a top priority.
Retailers say this shows how important flexible employment is for younger workers to balance education, family responsibilities or starting a career.
The industry warns that Generation Z workers could lose an important route into the world of work if employers are reluctant to offer flexible arrangements due to regulatory or financial constraints.
Concerns over the Employment Rights Act come amid wider tensions between retailers and the government over rising employment costs.
Businesses have already criticized increases to employers’ National Insurance contributions and the National Living Wage introduced as part of Labour’s first autumn budget.
Many employers argue that the combined effect of higher payroll taxes, wage increases and new workplace regulations is creating a more difficult hiring environment.
Appearing before the House of Commons Treasury Select Committee, Chancellor Rachel Reeves acknowledged criticism of the National Insurance increase and said there was a “valid argument” that it could have been avoided.
However, Reeves defended the decision, saying the tax rise helped to fund improvements to the NHS and reduce waiting lists.
Retail executives remain concerned that further cost increases could slow hiring, particularly in industries with thin margins and large workforces.
The debate over workers’ rights legislation comes at a time when youth employment is already under scrutiny.
Latest official figures suggest that almost a million people aged 16 to 24 are currently not in education, employment or training (NEET) in the UK.
Economists and labor market experts warn that extended periods away from work or training can have lasting effects on young people’s future earnings, skills development and career prospects.
The retail and hospitality sectors have traditionally offered entry-level positions that help young people gain experience, build confidence and develop transferable skills in the workplace.
If those opportunities shrink, experts worry it could become harder for young people to enter the workforce and build long-term careers.
Despite industry concerns, ministers insist the legislation will ultimately strengthen the labor market, not weaken it.
A government spokesman said supporting young people into employment remained a priority, citing the ongoing review led by Alan Milburn.
The government argues that the Employment Rights Act will improve job security for more than 18 million workers, including younger workers who are often overrepresented in insecure or low-paid jobs.
Officials also maintain that companies can continue to offer flexible work arrangements where employers and employees agree.
“The Employment Rights Act will increase employment and improve job security for over 18 million workers, with young people among the biggest winners,” the spokesperson said.
“This does not mean that companies will have to reduce their flexible roles and employers and employees will still be able to agree working hours that suit them best.”
The debate highlights the broader challenge facing policymakers: how to improve employment protection without hindering job creation.
Proponents of the legislation argue that stronger rights would lead to fairer and more stable workplaces and help address unsafe employment practices that have increased in parts of the economy.
But critics warn that well-intentioned reforms could have unintended consequences, particularly for younger workers looking for their first job.
Given rising youth unemployment and still modest economic growth, the effectiveness of the reforms may ultimately depend on whether companies continue to create accessible entry-level positions.
For many young people entering the workforce, these first opportunities could prove crucial in shaping their long-term career prospects.
