Poor scheduling and underemployment costs UK retail billions

The UK retail and hospitality sectors are facing significant operational strain, scoring a modest 65 out of 100 on the newly introduced “Frontline Workforce Index” by economics research consultancy Retail Economics and workforce management company Legion. Based on a representative survey of 2,000 frontline workers conducted in April 2026, the research highlights a critical disconnect between standard workforce management processes and their real-world execution. This systemic breakdown has saddled employers with an estimated 6.7 billion British pounds in hidden workforce costs while leaving thousands of employees financially and professionally unfulfilled.

At the heart of this friction is a severe mismatch in scheduling, with approximately 320,000 frontline employees currently underemployed and actively seeking more hours. Representing 8.5 percent of the sector's total workforce, this underused pool of labor equates to 3.6 billion pounds in unrealised annual earnings potential. The report notes that an operational rebalancing—specifically shifting hours away from the 103,000 workers who desire fewer hours and toward those who want more—could successfully reallocate 0.9 billion pounds in earnings, vastly improving labor utilisation and income security before businesses resort to external recruitment.

“Retail and hospitality are carrying a significant amount of hidden labour friction, challenging whether frontline models are stable, responsive and efficient enough to make better use of the workforce already inside it,” comments Richard Lim, chief executive at Retail Economics, in a press release.

Poor scheduling practices drive up workforce cost

Compounding this hours mismatch is a costly retention crisis, as weak attachment affects roughly one fifth (21 percent) of the workforce who have three or more years of industry experience. Over half of these highly knowledgeable, long-serving employees are at risk of leaving the sector across every major region despite boasting an average tenure of eight years. If these workers depart, employers face a massive 6.7 billion pounds replacement-cost exposure, which includes 5.1 billion pounds in direct training expenses and 1.6 billion pounds in lost operational efficiency while new hires slowly build up their productivity.

The breakdown in workforce resilience is primarily driven by poor scheduling practices, with “Schedule Stability & Predictability” ranking as the lowest-performing pillar on the index with a score of 59. The lived reality for frontline staff is highly volatile; over half (52 percent) of employees receive their final rotas just two to three days before their shifts start, and an overwhelming 89 percent have experienced shift modifications or cancellations with less than 48 hours' notice. Consequently, not even a fifth (18 percent) of surveyed workers describe their schedules as “very stable,” severely impacting their ability to plan their personal lives.

To bridge this process-versus-practice gap, the report highlights the potential of AI-enabled workforce tools to optimise demand forecasting and align rota timings. Frontline workers are generally open to adopting AI solutions for practical tasks like shift swaps and hour matching, but their acceptance hinges strictly on trust and transparency.

To comfortably adopt these tools, more than half (53 percent) of employees demand the ability to easily update their availability, half (50 percent) want built-in compliance rules, 42 percent require straightforward explanations of AI decisions, and more than one third (36 percent) demand a clear path for human review or appeal.

Building workforce resilience

Ultimately, industry leaders emphasise that building workforce resilience has evolved from a basic HR function into a distinct commercial advantage. By addressing internal labor friction, employers can simultaneously mitigate avoidable churn, optimise current capacity and elevate customer execution.

The report concludes with a five-action strategic playbook for operators, advising them to minimise rota volatility, prioritise internal hour matching over external hiring, tailor employee value propositions to specific worker personas, strengthen local managerial execution and responsibly deploy AI tools to foster trust.

“Retailers and hospitality operators are striving to optimise scheduling in order to unlock the full potential of their existing workforce. More intelligent demand forecasting and labour planning can further close the gap, meeting both business and workforce needs. This report proves the commercial case is substantial,” concludes Marcus Beaver, managing director, EMEA at Legion.