Forthcoming changes to the National Minimum Wage (NMW) risk reducing entry-level opportunities in the retail sector, with retailers increasingly favouring experienced hires to manage rising labour costs, new research suggests.
A survey of 100 UK retailers by RSM UK found that 48 per cent plan to recruit more experienced workers following the April 2026 NMW changes, while 29 per cent expect to cut back on entry-level roles. The reforms, which bring younger age bands closer to the main NMW rate, could make it harder for young people to secure their first job.
Chris Robson, employment tax partner and fair pay lead at RSM UK, warned the findings point to a challenging outlook for younger workers.
“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,” he said,
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.”
The survey also highlights how retailers are adapting their workforce strategies to offset higher wage bills. Around 31 per cent said they plan to reduce employee hours, 30 per cent intend to limit overtime, and 27 per cent are considering cutting headcount.
Baker said such measures reflect the pressure on retailers to balance rising employment costs with maintaining customer experience. However, she cautioned that restricting entry routes into retail could ultimately exacerbate youth unemployment while also driving up long-term labour costs for businesses.
The findings come amid increased scrutiny of wage compliance. Nearly 400 employers, including major retail names, have recently been named for underpaying staff, with total penalties reaching £7.3 million.
From 7 April, the newly launched Fair Work Agency will have enhanced powers to penalise employers up to 200 per cent of NMW underpayments. The body will also expand enforcement to areas such as holiday and sick pay.
Robson said the tougher enforcement landscape means retailers must treat holiday pay compliance with the same level of scrutiny as minimum wage obligations. He warned that gaps in payroll systems and policies, historically overlooked due to limited enforcement, could now expose businesses to significant financial and reputational risks.
“The goalposts have moved,” he said. “Retailers need to ensure their policies and processes are robust.”