Next chief executive Lord Wolfson has warned of a “dramatic fall” in entry-level job opportunities across the UK, as a result of rising employment costs and weaker hiring conditions.
Wolfson told the BBC that Next typically received around 10 applicants for every shop vacancy two years ago, but that figure has now climbed to 19.
“That doubling of applicants for shop jobs is indicative of just how big the crisis is in youth unemployment at the moment,” he said.
Wolfson said young people were being hit hardest by a broader slowdown in the jobs market, with those with the least experience often the first to lose out when businesses cut back on hiring.
“Youth unemployment is really a symptom of wider problems with employment in the economy,” he said.
“If you’ve got fewer jobs, the people who suffer most are the people with the least experience and that is the youngest.”
Wolfson’s warning comes amid growing concern over the number of young people out of work. The latest figures show unemployment among 16 to 24-year-olds has reached 16.2 per cent, its highest level since late 2014 and more than three times the wider unemployment rate of five per cent.
High street retailers, restaurants, cafés and pubs have traditionally provided many young people with their first experience of work, particularly those still in education.
However, retailers have warned that higher employer National Insurance contributions and increases to the minimum wage are making it harder to create lower-paid and part-time roles.
Wolfson said Next had reduced staffing levels in some stores as a result of rising costs, while investing more in automation and technology.
The retailer has introduced self-scanning lockers for customer returns, reducing the need for staff to process items at tills.
He has previously said government policy changes had added around £70m a year to Next’s wage bill.
Wolfson also criticised incoming changes under the Employment Rights Act, warning that a ban on zero-hours contracts from next year could make it more difficult for retailers to offer extra shifts.
The government has argued the legislation will end “one-sided flexibility” and give workers more security and predictability.
Wolfson said he supported eliminating zero-hours contracts in many sectors, but warned the reforms could create problems for retailers that rely on seasonal flexibility.
“You can’t afford to have the same number of people in your shop in February as you have in and around Christmas,” he said.
“That’s going to be bad news for our colleagues who want extra hours, particularly students who, in holiday time, need extra hours, and of course bad news for customers because service won’t be as good.”
The Trades Union Congress defended the policy, describing it as “hugely popular”.
A spokesperson said the right to a regular-hours contract would be based on a reference period over several months, which would help account for seasonal peaks and troughs.
“This will give insecure workers on variable hours security in their working lives which they are so badly lacking at the moment,” they said.
The Treasury said increasing the national minimum wage had boosted pay for more than 200,000 young workers, while employer National Insurance contributions remain lower when hiring under-21s.
“Cutting wages for the lowest paid during a time of global uncertainty is not the answer,” a spokesperson said.
The department also pointed to a £2.5bn youth employment support package, which it said would “deliver a million opportunities across the country”.
A Department for Business and Trade spokesperson said the government’s Budget had helped stabilise the economy and deliver support for families and businesses.
Next, which employs more than 30,000 people, has remained one of the high street’s strongest performers. It recently lifted its full-year profit guidance to £1.2bn after sales rose 6.2 per cent in its first quarter.
The retailer has also bought or taken stakes in a string of struggling brands in recent years, including Joules, FatFace, Cath Kidston and Made.com.
However, Wolfson rejected suggestions that Next was prioritising shareholders over workers.
“When people talk about a company making a billion pounds, they assume that that’s somehow a person with a billion pounds in their pocket and they must be very, very rich,” he said.
“But the nature of public companies is that we are owned by hundreds of thousands of savers whose savings are often very modest.
“The average dividend we’ll pay out to an individual saver will be around £300 a year.”
Wolfson said profitability was essential to survival in retail, pointing to the collapse of many former high street names over the past 25 years.
“What you can’t do is say, we just won’t run the business for profit because if you don’t run the business for profit, you just don’t stay in business,” he said.
He added that the government should focus on wider economic growth by reforming planning rules, energy policy and transport networks.
“All of these things are holding the economy back and if government could just take its foot off the brakes, we could have a much, much faster growing economy,” he said.
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