Employee pay can be one of the most contentious issues for employers to deal with – particularly when finances are being placed under the spotlight right across the board.
Official figures from the Office for National Statistics (ONS) reveal that UK workers have suffered the biggest fall in pay for nearly nine years when taking soaring inflation into account, as the cost-of-living crisis continues to take hold.
And as some of the UK’s largest private sector employees, wages at the UK’s major supermarkets have come under scrutiny in recent months.
Following Grocery Gazette’s investigation into supermarket pay in February of this year, inflation has continued to skyrocket to values higher than predicted and the crisis is further exacerbated by the war in Ukraine.
As a result, trade unions, employees and investors have voiced their concerns about supermarket employee current pay deals, forcing the grocers back to the drawing board as they look to balance the books and tackle the cost of living crisis while still raking in a net profit.
Sainsbury’s and Tesco
Just last week, two of the UK’s largest supermarkets announced a new pay deal for their employees with. Tesco increased its hourly pay for in-store staff and depot staff members by 5.8% from £9.55 to £10.10 from July 2022, while Sainsbury’s increased its outer London pay from £10.50 per hour to £11.05 following pressures from its shareholders to pay ‘real living wage’.
The supermarkets improved their employee pay deal just in time for April’s minimum wage increase to £9.50 – a 6.6% increase – in a bid to match the increasing inflation rates.
They join Morrisons, Lidl, Aldi, and Waitrose as the only supermarkets paying ‘real living wage’ in the UK.
Sainsbury’s and Tesco have more leeway than other grocers when making the decision to increase their employee pay deals. After all, between them the two stores account for a whopping 42.5% of the UK’s grocery market share and earlier this week, Tesco reported that its pre-tax profits tripled to £2.03 billion.
With profits tripling at a time when consumers – including its own employees – are struggling to make ends meet, Tesco’s results sparked discussions with retail experts and consumers stating their opinion about whether the UK’s largest supermarket should be doing more during this difficult period.
Talking to Grocery Gazette, retail expert and director at The Retail Mind, Ged Futter said: “Tesco has increased their wages higher than they’ve ever done before. It is now is the same as Aldi so I wouldn’t be asking them to do anything more, they’ve already given a significant increase.”
The latest price increase means that Tesco’s wages now match Aldi’s. “You need to be offering a salary that is the same as your competitors,” said Futter.
“What you will see is that those who don’t follow suit will find that their colleagues start looking round for other opportunities.”
Asda and the GMB Union
Asda increased its pay offer this month to £9.66 (in London the current rate is £10.83), which is above the government’s national living wage. But the GMB Union accuses this pay rise of being ‘below inflation’ rates.
The GMB claimed the grocer is a ‘minimum wage employer’ as its pay offer is the lowest of the Big 4 grocers, below the ‘real living wage’ of £9.90 an hour.
GMB’s latest statement revealed the survey results for 2,000, predominantly female, workers at the supermarket giant. Just 4% said they will be able to afford higher energy costs when the price cap rises.
We surveyed more than 2000 @asda retail workers
🛒 70% say the cost of living crisis is having a negative effect on their mental health
💷 more than half have had to borrow money
🏭 only 4% say they can pay higher energy bills
They need a pay rise 💪pic.twitter.com/HId1qsAisC
— GMB Union (@GMB_union) April 11, 2022
“We’ve spoken to our members and they’re clear – they’re forced to borrow money and are enduring a negative impact on their mental health because their pay is so low,” GMB national officer Nadine Houghton said.
“Asda now have the dubious honour of being the worst paid major supermarket. Its staff deserve better.”
In response to the GMB comments, Asda claimed the GMB “refused to share [the report] or any questions that were asked – so unfortunately we don’t have any context as to how questions were framed.”
In an official statement, Asda’s spokesman said: “We pay our store colleagues a competitive hourly rate benchmarked against the retail sector and our pay rate will increase by 7.35% over the next two years.
“Unlike most competitors, we also pay all store colleagues a bonus, worth an average of £413 for full time hourly paid colleagues last year. This is part of a comprehensive benefits package, which also includes 10% off shopping in-store and online.”
The feud between Asda and the GMB union has been ongoing for months and the trade union looks unlikely to step down from the fight until it has secured the pay deal its feels workers deserve.
“You have to choose where you’re going to be putting your money,” Futter continued.
“Asda has given an increase but that’s just been left behind by the increases of all the others. They will sit still until they get pressured to move elsewhere – to increase their wages and even it up.”
“But that ultimately comes down to what they can afford and where they choose to invest their money.”
With Asda set for a massive overhaul to its budget line which will likely stretch the supermarket’s finances, it may be a while before we see any news about Asda agreeing to any new pay deals.
Should supermarkets take more accountability?
Supermarkets in the UK are treating the serious issue of supermarket pay deals as a game of poker. They sit around a table waiting to see if their rivals take the initiative to raise the current bet, putting their chips on the line, before calling or folding their hand. Except its not chips they are playing with, but their employees’ wages and livelihood.
Last month, Two Sisters, one of the UK’s largest suppliers, noted that consumers – especially workers – would be required to pay more for cost increases but failed to note how retailers could afford to absorb these costs.
“This is a telling omission. It reinforces the private view of many UK suppliers that the power of the retailers forces them into increasingly one-sided negotiations, which are contributing to the continued reduction of working standards in the industry,” GMB national officer Eamon O’Hearn writes in her article for The Grocer.
O’Hearn continues her hit against supermarkets, comparing the ‘ hoarding’ of supermarkets’ finances to that of the price gouging of the big six energy companies.
“Many argue that energy for heating and cooking is essential and should not result in consumers being exploited. Yet there is almost no discussion on the profits made by the big six supermarkets.”
Lastly, Eamon O’Hearn concludes: “Perhaps the most pernicious aspect of their profit-hoarding is the way some retailers have fiercely responded to legal challenges regarding their wage structures, which have been found to be discriminatory by tribunals.
“Many retailers are throwing huge amounts of money at defending an inequitable status quo, raising questions about their real intentions.”