Tesco has made its biggest ever investment in employee pay, investing £230m as it boosts its hourly rate to more than £11ph; the third increase in the past 10 months.
The UK’s largest supermarket has joined Sainsbury’s and Asda in raising the rate of hourly pay for instore colleagues in stores by 72p, from £10.30 to £11.02. The new hourly rate represents a 7% rise in base pay and will come into effect from 2 April 2023.
The new deal – which has been introduced to “reflect the increasing costs colleagues are currently facing” – is part of an agreement with employment union USDAW.
It marks the third pay increase for Tesco store colleagues in the last 10 months, a significant investment of more than £230 million, taking the retailer’s total investment in hourly pay increases over the last year to a record-breaking £450 million.
“For the second year in a row, we have made a record single-year investment in base pay for our colleagues,” said CEO Jason Tarry.
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“We know that many colleagues have felt the pressure of rising costs this year and we are absolutely committed to supporting them with competitive base pay and exclusive colleague benefits. This agreement recognises the incredible work and dedication our teams show every day in serving our customers.”
Further employee pay benefits will be introduced at the same time, including an increased additional skills payment for shift leaders, taking their hourly rate to £13.28.
Two new London allowance areas will also be introduced. Colleagues working in London Boroughs will see their pay rise to £11.95 per hour, while colleagues working in Outer London (inside the M25 but excluding London Boroughs), will be earning £11.75 per hour.
Colleagues who joined before 24 July 2022 will continue to be eligible for Sunday premium rates, although that will drop from 25% to 17%.
USDAW national officer Daniel Adams, said the deal represents a “significant step forward” for pay within Tesco retail and demonstrates the value of “employers engaging constructively with trade unions at this incredibly difficult time”.
The pay increase is the latest boost in employment benefits as supermarkets continue to compete for staff. Sainsbury’s and Asda have increased pay to above £11ph in the past few weeks, while Aldi has raised its instore workers pay three times in the past year.