New labour market figures underline the growing pressure facing the UK’s family-run wholesale and retail sector as businesses contend with rising employment costs.
The latest ONS figures show that the wholesale and retail sector had 76,000 fewer payrolled employees in August than a year earlier – the largest fall in employee numbers of any sector. Across the economy as a whole, the number of payrolled employees fell by 145,000 over the same period.
The figures are particularly significant for family businesses, which form the backbone of the UK’s wholesale and retail sector. More than 510,000 family businesses operate in wholesale and retail – representing 91.3% of all firms in the sector.
Together, these businesses employ 2.73 million people, accounting for more than two-thirds (68.4%) of employment across wholesale and retail. Family firms in the sector also generated £974 billion in turnover in 2023 – more than family businesses in any other part of the economy.
The latest employment figures reflect the pressures the family business sector is facing.
Our latest Family Business Pulse found that 38% of family businesses identify rising employment costs as a significant barrier to hiring, while 29% say Employer National Insurance Contributions are among the tax measures having the greatest immediate impact on their business.
Despite these pressures, family firms remain ambitious. More than half (55%) expect to increase their workforce over the next 12 months, although 79% of those expecting to recruit anticipate only a slight increase in staff numbers.
Fiona Graham, Chief Operating Officer at Family Business UK, said:
“The latest employment figures should concern anyone who wants to see businesses investing, growing and creating jobs across the UK.
“Wholesale and retail is overwhelmingly a family-business sector. More than 500,000 family firms operate within it, employing over 2.7 million people and making a major contribution to communities and local economies across the country.
“Family businesses want to employ more people – our own research shows that 55% expect to grow their workforce over the next year. But rising employment costs are making those ambitions increasingly difficult to realise.
“Ahead of the Budget, Government should focus on creating the conditions that give businesses the confidence to recruit. That means reducing the burden of Employer National Insurance Contributions and carefully managing future increases in the National Minimum and National Living Wage.”