Next CEO Highlights Sharp Decline in Entry-Level Jobs
The chief executive of Next has issued a warning regarding a "dramatic fall" in the availability of entry-level job opportunities across the UK.
Lord Wolfson told the BBC that two years ago, Next usually received 10 applications for every shop job, but that figure has since increased 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 stated.
He also expressed concerns that the upcoming ban on zero-hours contracts, effective from next year, will complicate the hiring process.
The government describes zero-hours contracts as "exploitative" and asserts that its Employment Rights Act eliminates "one-sided flexibility," requiring companies to provide employees with a "baseline" of security and predictability.
Lord Wolfson, a Conservative peer, further urged the government to reverse recent increases in employer National Insurance contributions and minimum wage hikes. Nevertheless, he emphasized that economic growth remains the primary solution to improving the job market.
"Youth unemployment is really a symptom of wider problems with employment in the economy, and of course, if you've got fewer jobs, the people who suffer most are the people with the least experience and that is the youngest,"
the chief executive explained.
A Treasury spokesperson responded by highlighting that raising the national minimum wage has increased pay for over 200,000 young workers and noted that employer National Insurance contributions are reduced when hiring individuals under 21.
"Cutting wages for the lowest paid during a time of global uncertainty is not the answer,"
the spokesperson added, mentioning a £2.5 billion youth employment support package intended to "deliver a million opportunities across the country."
A spokesperson from the Department for Business and Trade, referencing that Lord Wolfson earned £7 million last year, stated that the government's Budget has enabled economic stabilization and provided support for families and businesses.
Youth Unemployment and Economic Challenges
Concerns are mounting over the number of young people not in employment. Recent data indicates the unemployment rate for 16 to 24-year-olds stands at 16.2%, the highest since 2014, and more than triple the general unemployment rate of 5%.
High street retailers and hospitality sectors such as restaurants, cafes, and pubs often serve as the first workplace experience for many young individuals, particularly those still in school or further education.
However, companies including Next have cautioned that increased taxes on employers and higher minimum wages are impacting their capacity to create roles, especially lower-paid, part-time positions. Additionally, sluggish economic growth can deter hiring, as businesses may delay investment.
Lord Wolfson noted that due to rising costs, Next has reduced staff numbers in individual shops, while its online business continues to thrive. He previously indicated that government policies have increased Next's wage bill by £70 million annually.
He also mentioned the retailer's growing use of automation and technology, such as self-scanning lockers for customer returns, reducing the need for staff at tills.
Next is regarded as a high street success story, having evolved and adapted while many former competitors have ceased operations.
The company has acquired brands like Joules, Fatface, Cath Kidson, and Made.com, which have faced difficulties in recent years, and employs over 30,000 people across its operations. Earlier this month, Next raised its full-year profit forecast to £1.2 billion, with sales increasing by 6.2% in the first quarter.
Lord Wolfson dismissed suggestions that the retailer prioritizes shareholders over employees.
"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. But the nature of public companies is that we are owned by hundreds of thousands of savers whose savings are often very modest,"
he explained.
"The average dividend we'll pay out to an individual saver will be around £300 a year."
Profitability and Business Sustainability
Lord Wolfson emphasized the necessity for Next to remain profitable.
"If you look at retail over the last 25 years... 70 to 80% of the names that were there then have gone. And 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 stated.
He reiterated his criticism of the government's Employment Rights Act, warning that certain aspects of the legislation will make it "going to get much harder" for Next to offer additional hours to staff.
One reform requires employers to provide guaranteed hours to casual workers to reduce the use of zero-hours contracts.
Lord Wolfson agreed with eliminating zero-hours contracts in most sectors but noted the new rules pose challenges for retail.
"Because the risk is you then have to contract for those hours forever,"
he said.
"You can't afford to... have the same number of people in your shop in February as you have in and around Christmas,"
he added.
"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."
Conversely, the Trades Union Congress described the policy as "hugely popular," noting that the right to a regular-hours contract will be based on a reference period spanning several months, balancing peaks and troughs, and will not affect holiday jobs.
"This will give insecure workers on variable hours security in their working lives which they are so badly lacking at the moment,"
a spokesperson said.
Calls for Broader Economic Reforms
Rather than focusing solely on youth unemployment, Lord Wolfson advocated for government efforts to reform planning laws, energy policies, and transport infrastructure to stimulate overall economic growth.
He urged the government to release more land for development, citing that the cost of an acre of agricultural land in southeast England is approximately £15,000 but can rise to £1.5 million with planning permission.
"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 concluded.
