More than 300,000 retail and hospitality workers are struggling to secure the hours they want as rising employment costs force businesses to rein in hiring and shifts.

New research from Retail Economics and Legion Technologies found 8.5 per cent of workers across the two sectors are now underemployed, meaning they want to work more hours but cannot secure them.

The study estimated that around 320,000 retail and hospitality staff are missing out on a combined £3.6bn in earnings as employers cut back on labour costs.

It comes as retailers continue to warn that higher employment costs, including the increase in employer National Insurance contributions, have made it harder to recruit, offer overtime and create new roles.

Retail Economics associate director Nicholas Found said policy and labour costs were “definitely part of the backdrop”, adding that businesses were increasingly relying on fewer staff during busy trading periods.

“It comes as no surprise that workers are stretched,” he said.

The report found that a mismatch between the hours employees want and the hours they are offered is adding to wider workforce pressures across retail and hospitality.

It also warned that high levels of staff turnover, particularly among more experienced workers, risk creating further costs for businesses through recruitment and training.

British Retail Consortium director of business and regulation Tom Ironside said retail had “long been a vital source of flexible jobs”, but warned those opportunities were coming under growing pressure.

“Employment in retail has fallen to a record low as higher labour costs and additional regulatory burdens make it harder to recruit and create new roles,” he said.

Ironside also said the Employment Rights Act had made it harder for retailers to offer additional hours in line with changing demand.

The legislation requires employers to offer statutory sick pay and guaranteed hours to workers on zero-hours contracts, prompting concerns from some businesses over the impact on flexible hiring.

UKHospitality chair Kate Nicholls said hospitality firms wanted to offer more hours and create more jobs, but were being held back by rising cost pressures.

“Hospitality businesses are desperate to offer more hours and create more jobs but the current cost burdens are simply so high that businesses regrettably cannot do so,” she said.

The latest findings add to mounting concern over the health of the retail labour market, with Office for National Statistics figures showing more than 150,000 retail and hospitality jobs were lost in the 12 months to May.

A Treasury spokesperson said the Government was “backing the high street” through measures including business rates reform, a £4.3bn support package to limit bill rises, a corporation tax cap and action on the cost of living.

They added that increases to the national minimum wage would boost pay for more than 200,000 young workers, while employer National Insurance contributions were lower when hiring under-21s.

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