Supermarket giant Sainsbury’s have announced today that they will award 137,000 colleagues working in stores across the country a pay increase of four percent, taking their standard rate of pay to £7.36 per hour, effective from 30 August.
The decision takes pay for store employees above the Government’s new National Living Wage announced by George Osbourne in his Summer Budget of £7.20 per hour for all workers aged over 25 by April 2016. Sainsbury’s has also decided not to differentiate between over and under 25s, so the new hourly rate of £7.36 will also apply to more than 40,000 colleagues under the age of 25.
Sainsbury’s colleagues also enjoy a range of valuable benefits over and above hourly pay, such as paid breaks, a pension, life insurance, a discount card and an annual bonus. According to the supermarket chain, this year 133,000 employees shared a bonus pot of £50 million.
“We’re delighted to announce a four percent pay increase for the colleagues who work in our stores across the country,” said Sainsbury’s CEO, Mike Coupe, “We know what a difference they make to our customers each and every day and we’re totally committed to rewarding them well for the great service they provide. I’ve talked to thousands of colleagues over the past year and they tell me how much they value their package of benefits and the flexibility that we can offer as an employer, as well as hourly pay which has always been well over the minimum wage. Their hard work, talent and dedication have been central to our success and will remain so in the future.”
Dr. Shainaz Firfiray is an assistant professor of organisation and human resource management at Warwick Business School and researches ethics and work-life balance. Dr Firfiray said, “This is a good announcement that comes in the wake of a fierce price war among the supermarkets. Many people believe that the Government’s new national living wage is likely to result in higher prices for customers. However, whether this move will actually result in retailers such as Sainsbury’s and Tesco passing the costs to their customers is debatable.
“A widespread assumption within the retail sector is that companies have no choice but to offer low wages because if retailers, whose business models entail competing on low prices, make greater investments in employees their customers will have to pay higher prices.
“However, research within the retail industry has found that this presumed trade-off between investing in employees and offering lower prices can be broken. Companies like Costco and Mercadona not only invest in their workforce by offering better employee benefits and training, but also offer among the lowest prices in their sectors, have better customer satisfaction and financial performance than their competitors.
“Labour costs form a high proportion of a retailer’s expenses and are generally perceived as a cost-driver rather than a sales driver, so most retailers tend to focus on minimising labour costs by paying low wages, offering few benefits and little or no training.
“Retailers who hold such beliefs will miss out on the opportunity to improve their own performance as well as contribute to creating the kind of jobs that the UK economy really needs. When supported by the right type of operating practices, retailers can not only compete effectively on prices but also keep customers and employees satisfied.”
The announcement of a four percent increase today represents the highest pay increase for in-store employees the company has awarded in over a decade.