Will government heed warnings over youth employment?

Former health secretary Alan Milburn’s youth employment report last month was packed with shocking facts on the jobs crisis threatening the UK.

Most alarming was that within five years, the number of young people not in education, employment or training (NEETs) could hit 1.25 million, or one in six, creating a “lost generation”. More than a million are already in this bracket.

One of the lesser reported findings, though, was the sheer number of failing initiatives aimed at tackling the problem. In Barnsley alone there were no fewer than 70 organisations with schemes aimed at confronting youth unemployment. What Milburn calls a “spaghetti soup” of schemes, from government to job centres and youth hubs, share no effective mechanism to shift the dial.

And the cost of employing young people is preventing retail from playing its traditional role as a gateway to employment, a swathe of supermarket CEOs told PM Keir Starmer last week. So could their letter, orchestrated by the BRC and signed by 80 retail bosses, be a smell-the-coffee moment for government? Or is it merely the latest cry in a long-running row over taxes?

Signed by CEOs or senior executives representing all of the UK’s major supermarkets, and a string of big high street players, the letter warns of a crippling combination of higher employment costs and a lack of economic growth.

It calls on ministers to create a joint government-retail taskforce to simplify and enhance regional and national support for youth employment, while taking measures to reduce the cost of employing young people and scrapping regulation that acts as a barrier.

Employment costs

Since Chancellor Rachel Reeves’ 2024 budget stunned retailers by hiking employer National Insurance contributions (NICs) from 13.8% to 15%, and lowering the threshold at which businesses start paying to £5,000, the BRC has persistently argued it is self-defeating, having increased retailers’ employment costs by £6.5bn.

The trade body blamed costs as new ONS data this week showed there were 2.79 million retail jobs in quarter one of 2026, using a four-quarter average to smooth out seasonal variations. That’s 66,000 fewer than a year earlier and 398,000 fewer than 10 years earlier.

“Retail has traditionally provided millions of people with their first job,” says BRC corporate affairs director Jim Bligh. “But with employment costs as high as they are, economic growth as slow as it is, and the red tape of the Employment Rights Act drowning stores, it’s hard to see how this ladder into work can continue.”

High among concerns is how the act is set to end zero-hours and low-hours contracts from 2027, with a consultation running until August. Employers will have to offer guaranteed hours reflecting actual working patterns over a reference period, a move the BRC says kills flexibility and opportunities for the young people the legislation intends to protect.

Bligh says the legislation fundamentally misunderstands the traditional role retail has played in helping youths into work.

Providing first jobs for young people means “taking a risk on somebody who doesn’t have skills and experience,” he adds. “That is a challenge when the cost of employing a part-time worker has increased by 13% and a full-time worker by 10%.”

Tesco group CEO Ken Murphy tells The Grocer: “We are very keen to work with the government on the creation and availability of jobs for young people. The retail industry is a critical first step for hundreds of thousands of people every year to start their careers, and the same is true from a Booker lens of the catering and pub industry.”

He says Tesco simply wants “them to recognise the importance of this careers ladder”.

There are of course plenty who say retail chiefs unhappy over employment costs should consider their own pay.

More than 10,000 workers signed a petition presented at Tesco’s recent AGM attacking the disparity. Murphy, who was paid £10.8m in 2025/26, including a £1m rise, didn’t sign the letter to Starmer, but his UK CEO Ashwin Prasad did. Petitioning body Organise points out Murphy earns 420 times the wages of a typical Tesco worker.

But retail bosses insist that pay disparity is not the issue.

“You could eliminate all CEOs and redistribute all their pay to young people and it wouldn’t touch the sides of the £6.5bn increase in NICs,” says a source.

“People can carp about CEO pay but the reality is that retail employment has contracted.”

A complex issue

Milburn’s report admits sectors that have historically provided many of the easiest entry points into work, such as retail, have been hardest hit, but adds caveats. “It is worth remembering that those under 21 remain exempt from employer NICs and… the increase in youth inactivity long precedes any recent changes to NICs.”

Milburn says that to “increase youth participation”, policy “needs to avoid creating a labour market in which costs of entry have risen but the incentives to provide it have not”.

The implications of the crisis for food & drink are not limited to retail and hospitality.

The Grocer revealed in February that IGD was relaunching its Feeding Britain’s Future initiative, first created in 2012. This month it revealed details of a major reboot to move beyond traditional block placements for work experience to a more flexible and scalable model.

The FBF movement includes a partnership with The Careers & Enterprise Company, the national body for careers education, to deliver a “modern work experience very different to that which has gone before”.

The industry will, says IGD, be putting its marketing power behind the programme, in high-profile campaigns to boost the appeal to young people. But government action is essential.

“Government and industry must work together to build a long-term, joined-up workforce strategy that secures the people, skills and opportunities to keep the nation fed for decades to come,” says Harshal Gore, IGD director of economic & workforce programme.

He hopes the letter from retail chiefs “adds real weight and awareness” for ministers.

But it is the actions of those ministers on which the future of the food industry, and hundreds of thousands of young people, much depends.