According to analysis from Edison Group, Next (LON: NXT) is sounding the alarm over the health of the UK economy, warning that a combination of rising employment costs, increased regulation, and the accelerating adoption of automation is squeezing job opportunities and weakening consumer spending.
In a report titled “Cloud on the Horizon – Why NEXT is Bearish on the UK,” Edison’s Neil Shah stated that the retailer’s frontline data paints “a stark story” about the labour market.
The analyst highlighted that Next’s recruitment data shows that vacancies are down 35% compared with two years ago, while applications have surged 76%, meaning nearly three times as many people are competing for each available role.
Furthermore, the cost of employing staff has increased, with the National Living Wage rising 88% over the past decade, more than double the 38% increase in inflation.
Shah remarked that, including higher National Insurance contributions, the total cost of part-time employment has risen 102% since 2015.
Next is also said to have warned that the Employment Rights Bill could unintentionally hurt flexible work opportunities.
Shah said Next believes that extending zero-hours protections to so-called “low-hours” contracts might make it impractical for small businesses to offer extra shifts during seasonal peaks, forcing them instead to rely on temporary staff.
At the same time, rising costs and regulations are pushing firms toward mechanisation and AI.
Next’s warehouses, for instance, have reportedly achieved a 20% reduction in cost per unit over the past decade, adjusted for wage inflation.
While Next expects international operations to offset domestic weakness, Edison said the retailer remains “cautious about the UK’s outlook” as declining job opportunities and higher costs weigh on growth and consumer confidence.
“While NEXT is well positioned, with international growth offsetting UK headwinds, the company’s frontline perspective on employment trends suggests policymakers should pay close attention. The squeeze on UK jobs is real, measurable and accelerating,” the analyst concluded.
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