Pay has been a contentious issue for supermarkets over the past few weeks. With the rising cost of living sitting firmly at the top of the agenda, some have been hiking up their hourly rates accordingly, while others have found themselves battling pay disputes in the courts.
Last week, Marks and Spencer was the latest food retailer to announce a pay rise for colleagues on the shop floor, following in the footsteps of both Sainsbury’s and Asda, who made similar announcements last month. The supermarkets had hiked up employees’ hourly wages ahead of April’s National Minimum Wage increase to £9.50 – a 6.6% increase, in line with the increasing inflation rates.
The rises come as the cost-of-living crisis – sped along with fears of the highest rate of inflation for three decades – is already starting to bite for households across the UK. According to the Consumer Prices Index, the cost of food has already risen by an average of 4.4% and is expected to continue climbing.
Supermarkets are also beginning to feel the squeeze as commercial bills begin piling up for increasingly expensive commodities, packaging, energy and staff costs. Costs are being cut, with a focus on trimming less profitable areas such as fresh deli counters and loyalty schemes as supermarkets try to keep a lid on food prices in a highly competitive industry.
While some supermarkets have reinvested profits into shop-floor workers, incentivising in-store positions and preventing labour shortages, others have prioritised different areas of their business.
Read more: Asda strike looms after thousands turn down pay offer
Shifting priorities
The past few months have seen a number of supermarkets divert funding from night shifts, loyalty perks and less profitable in-store features as they focus on efficiency and value for money instead.
Earlier this month, Tesco announced 1,600 job cuts that targeted night shifts, deli and meat counters. Sainsbury’s and Asda also removed a number of fresh food counters recently; cutting costs where they can as they look to keep prices down across the board.
“We are always looking at how we can run our business as simply and efficiently as possible, so that we can re-invest in the things that matter most to customers,” said Tesco UK and Ireland chief executive Jason Tarry at the time.
However, “re-investing in the things that matter most” has not been applied to Tesco’s shop floor workers who last received a pay rise of 2.7% in September 2021. These re-investments have also not been applied to the customer-favourite meal deals, which will be subject to a 50p increase in price from next week.
Waitrose, on the other hand, opted to cease the free newspaper element of its loyalty scheme, which it has revamped with both personalised and exclusive offers.
“While the newspaper offer was enjoyed by some of our customers, in reality, it was only being used by around 5% of members. The new approach will mean that all members can make greater savings by receiving benefits tailored to them,” a Waitrose spokesperson explained.
Across the board, an increase of in-store automation has also been introduced in a bid to reduce staff numbers and costs. Self-checkout tills have expanded to large trolleys aisles, Sainsbury’s and Tesco have started using self-scanning systems, and Asda has trialled automated facial recognition for age-restricted items.
Tesco has also begun using electric vehicles to increase efficiency and to minimise reliance on HGV drivers.
By embracing these technological shortcuts and cutting back on less profitable services and perks, supermarkets have been able to redirect their cash into keeping prices down for consumers while also retaining colleagues on the shop floor.
Whether these funds have been adequately redistributed is another question entirely.
Read more: M&S raises hourly pay to £10 for all employees
Is the cost-of-living overtaking the cost-of-working?
Despite large supermarkets experiencing strong sales through Christmas and raising profit outlooks, many retailers have come under fire for offering inadequate pay rises and unequal pay.
Tesco “outperformed the market” and raised its profit outlook for the second time in four months after Christmas. However, the grocer went on to deliver one of the lowest pay rises in the industry, an increase of 2.7% to £9.55 an hour.
“Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value,” Tesco chief executive Ken Murphy said.
Asda has also been accused of offering a “below inflation” pay rise of £9.66 this April (£10.83 for its London colleagues). The supermarket has defended its decision, citing a 7.35% pay rise spread over two years – meaning currently the pay rise sits at 3.25%, below Office of National Statistics (ONS) inflation figures of 5.5%.
Despite GMB union claims that Asda is effectively a “minimum wage employer”, the retailer has said it “remains the only supermarket to pay all store colleagues a bonus”. This year’s bonus totals £27.8 million, which averages out to £413 for each full-time colleague.
Last month, the Trades Congress Union urged for “sector-wide fair pay agreements” following the news that real wages were “barely” set to grow in the coming years.
In December 2021 the Living Wage Foundation (LWF) also revealed that over 42% of all supermarket workers in the UK earned below living wage. Not one supermarket in the UK is an accredited living wage employer.
According to the LWF data, this disproportionately affects women workers from non-white backgrounds who are 44% more likely to earn below living wage, compared to their white counterparts.
Retailers such as the Co-op have also come under fire for the gender pay gap between shop floor workers (predominantly female) and distribution centre workers (predominantly male) – with the latter earning £3 more per hour. Last month, over 1,600 shop floor workers won a key legal argument in a battle to secure equal pay.
Tesco has also been subject to an equal pay campaign with similarly gendered claims over shop floor worker pay compared to warehouse worker pay.
Read more: Co-op shop floor workers win legal argument in equal pay fight
Pay day: the numbers
With pressures from inflation, maintaining profit margins and keeping their employees both engaged and productive – let’s see how supermarkets have chosen to balance the books.
Aldi
The discount retailer offers £10.10 an hour for new employees which increases to £10.57 after the three-year working at the store.
Asda
The Big 4 grocer has increased its hourly pay from £9.36 to £9.66 an hour from the start of April, with London colleagues receiving £10.83. Despite criticism that Asda has offered a below-inflation pay rise, the supermarket argues its bonuses have accommodated for it.
Co-op
Staff are currently paid £9.30 an hour nationally, with London colleagues earning £10.30 an hour – in line with 2020’s real living wage.
Lidl
In November 2021, Lidl announced it would offer a rise from £9.50 to £10.10 an hour nationally, with its London counterparts receiving a rise from £10.85 to £11.30.
Morrisons
From 2021, Morrisons became one of the first supermarkets in the UK to break the £10 an hour minimum wage barrier in a new pay deal that started in April 2021.
Marks and Spencer
Last week, M&S announced that every store colleague would receive a 50p raise to £10 an hour as part of broader reward package. London colleagues will receive £11.25 – surpassing London Living Wage.
Sainsbury’s
Like M&S, Sainsbury’s announced at the beginning of year that all colleagues would receive £10 an hour compared to the previous £9.50.
Tesco
In June, Tesco revealed a 2.7% pay rise for store staff taking it from £9.30 an hour to £9.55 an hour.
Waitrose
Staff who are not in management roles currently receive £9.50 an hour after a short induction period.
Click here to sign up to Grocery Gazette’s free daily email newsletter
