Government plans to force small stores to provide their staff with a pension will fuel a move to more part-time working and stop the creation of full-time jobs in the retail trade, it is feared.

From 2012 all businesses will have to provide pensions for employees who earn enough to pay tax, once a waiting period of three months has been completed.

Forum of Private Business spokesman Phil McCabe said the move would force cash-strapped retailers to rely more heavily on temporary staff. "It is creating a huge incentive for firms to avoid providing proper permanent jobs," he said.

Association of Convenience Stores chief executive James Lowman agreed, describing the reforms as yet another financial blow for retailers.

However, he welcomed the three-month waiting period. "This will stop shops having to fill out paperwork for an employee who ends up working for only a few days, or who works only a small number of hours," he added.

Lesley Brown of Frankmarsh Stores in Barnstaple, Devon, said she feared the reforms would make it even harder to compete against her larger rivals. "This is yet another cost for us and would prohibit us from taking on more staff. The multiples won't have any problems providing this so it puts small stores such as ours at an even greater disadvantage."