As the industry faces ever-increasing staff costs, is hiring young people still a viable option for local retailers?
Over the years, convenience retailers have provided hundreds of thousands of young people with their first experience of paid work, helping build the industry’s future workforce while filling essential store roles.
In fact, retail and its supply chain account for almost a quarter of all youth employment across the UK, according to the British Retail Consortium, making the sector one of the country’s most valuable providers of entry-level jobs.
But as employment costs continue to rise through higher wage rates, National Insurance contributions and increased regulation, many retailers are warning that it is becoming harder to recruit young staff.
Wage changes
Recent changes to minimum wage policy have dramatically altered the cost of employing younger workers. In April 2021, the National Living Wage age threshold was lowered from 25 to 23 years old, before being reduced again in April 2024 to include workers aged 21 and over.
The latest increases, introduced on 1 April 2026, saw workers aged 18 to 20 receive an 8.5% pay rise to £10.85 per hour, while 16 to 17-year-olds and apprentices received a 6% increase to £8 per hour. The National Living Wage now stands at £12.71 per hour, up 46% from £8.72 in 2020.
While higher wages are designed to improve living standards, many employers argue that the speed and scale of increases have created unintended consequences for young jobseekers.
Anthony Webster, Founder and Managing Director of DVF Recruitment, says: “We as a society are pricing young people out of the workplace through large increases in the National Minimum Wage and higher taxes on jobs via increases in National Insurance.”
He explains how the wage increases have impacted employers: “Back in 2020, if an employer wanted to hire a 21-year-old for 40 hours a week for a full year, it would cost them around £17,035. If that same employer wants to hire a 21-year-old on a 40-hour week today, it will cost them around £29,654 – a staggering 74% increase in the cost of employing young talent.
“So when people ask why more 21-year-olds are struggling to find work, that’s a good place to start looking.”
For many retailers operating with tight margins, these additional costs can influence recruitment decisions.
Essential skills
Scottish Local Retailer of the Year 2023 Billy Gatt, who owns Premier Whitehills in Aberdeenshire, has long championed employing young people and is frustrated by the current state of affairs.
“The number of people unemployed between the ages of 16 and 24 is scandalous,” he tells SLR.
Billy believes retail jobs provide much more than a pay cheque, helping young people develop confidence, communication skills and a work ethic.
“We employ a lot of young people ourselves. I see them come through and go to full-time work, or university or college,” he says. “My grandson just started a month ago doing three hours a week after school. He’s a clever lad and he just lacked a few social skills and it’s doing him the world of good.”
However, he argues that narrowing pay differentials between younger and older workers can discourage businesses from recruiting first-time employees.
“I don’t think increasing the minimum wage year on year for youngsters is encouraging businesses to employ youngsters. It’s actually having the opposite effect. I think that’s a mistake by the government. They cannot go backwards, but they need to slow down to maintain that gap in my opinion.”
He warns that when wage gaps become too small, employers may not have enough incentive to train up a newbie.
“When the pay band gap gets so narrow, people will want to have an older person who is more experienced, rather than training a new person to come through.”
He believes this risks depriving young people of key opportunities to enter the workforce and build social and professional skills.
“I know a lot of people don’t get the opportunity to get a job. Then they’re stuck in a rut and they don’t have any social skills. I just wish there was more incentive to get youngsters employed.”
Retail sounds the alarm
These concerns are not confined to individual businesses. On 10 June, the heads of Spar UK, Scotmid and the Scottish Grocers’ Federation joined more than 80 major retail CEOs in signing a letter to the Prime Minister coordinated by the British Retail Consortium (BRC).
The retailers demanded urgent action on the youth unemployment crisis, citing Alan Milburn’s interim report into young people and work, which warned that as many as 1.25 million under-25s could become unemployed over the next five years without effective action.
The warning comes at a time when the retail sector has already lost around 400,000 jobs over the past decade, raising concerns that traditional routes into work could continue to shrink. The situation is particularly acute in Scottish convenience, where the SGF Scottish Local Shop Report 2025 revealed that local retailers employed 6,000 fewer people than the previous year.
The letter called on government to:
- Establish a joint government-retail taskforce focused on youth employment.
- Reduce the cost of employing young people.
- Ensure employment and skills reforms support entry-level recruitment and career progression.
Helen Dickinson, Chief Executive of the British Retail Consortium, said: “The message from retail is clear: if government is serious about tackling youth unemployment, it cannot keep making it more expensive to create jobs.”
She added: “Retail and its supply chain account for almost a quarter of all youth employment, making our industry uniquely placed to support young people through flexible, entry-level roles and clear routes for progression. But this first step on the ladder is cracking under the weight of government-imposed costs and regulations.”
A new government response
The government has responded with fresh measures aimed at encouraging employers to recruit younger workers.
On 30 June 2026, it launched the Youth Jobs Grant, offering employers £3,000 for every eligible young person they hire. The initiative is designed to help up to 60,000 people aged 18 to 24 secure employment over the next three years.
Employers can apply through a simplified online process and will receive the funding in two instalments once employment and earnings have been verified by the Department for Work and Pensions.
Alongside the grant, the government is expanding intensive Jobcentre support for almost one million young people nationwide.
Striking the right balance
No one would argue against the principle of ensuring workers are paid fairly. However, retailers and recruiters are increasingly questioning whether rapidly rising employment costs are unintentionally reducing opportunities for the very people policymakers are seeking to support.
The challenge for government is balancing higher wages with incentives that encourage businesses to continue hiring inexperienced workers. The newly launched Youth Jobs Grant may help offset some of the financial pressures facing employers, but many in the industry believe broader reforms will be needed if retail is to maintain its role as the UK’s most important gateway to employment.
For local retailers, the issue goes beyond employment policy. Young people represent the next generation of supervisors, managers and business owners. Ensuring they have access to that crucial first job could be just as vital for the future of local retail as it is for the future of the wider economy.
