Soaring employment costs mean retailers are looking to reduce staff hours or even cut jobs, industry bosses have warned.

New research from the British Retail Consortium showed that 61% of retail CFOs (chief financial officers) and finance directors plan to “reduce number of hours and overtime” for staff.

Many bosses said they are also looking at cutting head office or shop-floor jobs in order to deal with rising costs.

Retail employment costs rose by £5 billion last year following increases to employer National Insurance Contributions and the National Living Wage in April.

The BRC estimated that the cost of employing a full-time entry-level worker therefore rose by 10%.

Firms are also set to face another increase in labour costs in April this year, as another rise in the National Living Wage, of 4.1%, comes into force.

Last year, the ONS revealed that the number of UK retail jobs fell by 74,000 to 2.76 million – the lowest level on record.

The new survey of retail finance bosses also found that more than half, 55%, are planning to “reduce head office headcount”, while 42% are looking to “reduce stores headcount”.

The data also pointed towards a downbeat outlook across the sector, with 69% of the bosses describing themselves as being pessimistic or very pessimistic for the future.

The fresh warning from the retailer also comes days after official figures showed that the unemployment rate jumped to a new five-year-high of 5%, with 16.1% of 16 to 24-year-olds unemployed in the latest quarter.

Helen Dickinson, chief executive at the BRC, said: “We all want more high-quality, well-paid jobs.

“But retail has already lost 250,000 roles in the past five years, and youth unemployment is climbing fast.

“The Employment Rights Act is the biggest shake-up of employment rules in a generation, and how it is delivered will make or break job opportunities.

“Done well, the reforms can raise standards while supporting flexible and entry-level roles that are vital for people whose lives don’t fit a fixed nine-to-five pattern.

“If the Government fails to consider business needs on policies including guaranteed hours and union rights, they will add complexity and reduce flexibility, ultimately stripping away entry-level and part-time opportunities at precisely the moment the country needs them most.”

A Government spokesman said: “We know retailers are facing a difficult time, but our employment rights act reforms will boost productivity and retention in workplaces across the UK and give job security to over 18 million workers.

“We are also supporting retailers through our small business plan, and we will work with business including the BRC to see what further support we can provide ahead of publishing our High Streets Strategy later this year.”