As UK hospitality businesses prepare for significant wage and tax increases, many are turning to Artificial Intelligence (AI) to improve labour productivity and employee engagement.
Research from Legion Technologies, a workforce management (WFM) provider, suggests that AI adoption could help businesses navigate these financial pressures without resorting to price increases or staff reductions.
National Insurance Contribution (NIC) and National Living Wage (NLW) increases are expected to add £5 billion to the retail sector’s wage bill this year. To manage these costs, many businesses are exploring AI-driven workforce solutions. The 2025 State of the UK Hourly Workforce report from Legion Technologies reveals that 65% of retail managers acknowledge the need to automate labour operations, yet only 19% currently use AI-driven scheduling tools.
Eoin Houlihan, Vice President of Europe at Legion Technologies, explains that AI offers an alternative to raising prices or cutting staff, helping businesses enhance workforce productivity while maintaining service quality. He highlights the importance of investing in technology to boost efficiency and employee retention.
Artificial Intelligence in Workforce Management
The report identifies inefficiencies in scheduling, compliance management and time tracking as major challenges for managers of hourly employees. Many still rely on manual processes, which take up valuable time. Almost two-thirds (65%) of managers spend over three hours per week on scheduling, and 52% spend a similar amount of time on tracking attendance. These administrative tasks limit the time available for strategic activities such as coaching, team development and customer engagement.
Despite these challenges, most businesses have yet to adopt AI-powered workforce management solutions. While 65% of retail managers believe artificial intelligence could simplify scheduling and 63% say it could streamline payroll, 81% are not using AI-driven software to automate scheduling. Forrester’s Total Economic Impact Report™ for Legion indicates that AI adoption could reduce scheduling-related tasks by five hours per week per manager.
Houlihan notes that AI-driven workforce management can allow managers to focus on higher-impact activities while improving scheduling flexibility, which plays a critical role in employee retention.
Employee Preferences and Workforce Retention
The research also highlights that schedule flexibility is a key factor for hourly retail employees when choosing a job. Nearly three-quarters (72%) say flexibility is their top priority, while 51% cite inflexible scheduling as a major retention challenge.
Houlihan suggests that investing in modern workforce management technology could help businesses move beyond short-term cost-cutting measures, offering a more sustainable approach to improving efficiency and employee satisfaction. AI-powered scheduling tools could enable businesses to align work shifts with employee skills and preferences, improving engagement and retention while addressing rising labour costs.
