[UK] Supermarkets face post-pandemic pressure of rising wages

One of the most persistent and intense pressures on British supermarkets is staff wages. This month Tesco became the latest big player to increase basic hourly pay rates above £10, higher than both the statutory minimum wage of £ 9.50 and the voluntary “UK real living wage”, J News reports.

Asda is now the only one of the UK’s largest supermarket chains to pay less than £10 an hour, although it does offer bonuses.

“There has been a market correction,” Nadine Houghton - an organiser at the GMB union - said.

“Working people have more bargaining power and many have come out of the pandemic with different expectations. They have realized they are key workers and expect to be rewarded. ”

Retail is the UK’s largest private-sector employer, with hundreds of thousands of hourly-paid staff in stores and distribution centres, leaving supermarkets acutely exposed to a restricted labour market and minimum wage legislation.

The pandemic prompted a hiring frenzy because supermarkets needed more staff for picking and delivering online orders and as cover for COVID-19 absences. In the UK, Tesco added 20,000 permanent roles during the pandemic and its staff costs have reportedly risen from £4.48bn to £ 4.73bn.

But as a result of the economic reopening, many workers have returned to their previous careers or left the labour force altogether.

According to the Office for National Statistics (ONS), there were 108,000 unfilled vacancies in retail in the first quarter of this year; the highest in more than two decades. While Tesco announced in January that it had about 3,000 unfilled jobs.

Ms Houghton said employers’ attitudes have had to change, especially towards women and part-time workers. “They’re not going to work for pin money.”

Asset managers are also calling for higher wages. Campaign group ShareAction is leading a coalition of investors that is calling on Sainsbury’s to become an accredited real living wage employer and plans to target other supermarkets.

Martin Buttle - head of good work at ShareAction - said, “[Investors] are wanting to show that they are integrating the ‘S’ in ‘ESG’ into their calculations and wages are an important component of that,” referring to environmental, social and governance issues.

Becoming an accredited living wage employer entails matching the real living wage as it rises each year and ensuring that third-party staff, such as security guards and cleaners, receive the higher rate. Currently, Burberry and Ikea are the only major accredited retail employers in the UK.

Sainsbury’s revealed that its pay review this year represented a £100m investment and exceeded both statutory and voluntary living wages.

“As we balance the needs of all our stakeholders. . . it is vital that we not only pay our colleagues fairly but that we are able to invest significantly to offer customers great value,” it added.

In a competitive labour market, a significant move by one company can affect the entire sector. A spokesperson for shop workers’ union Usdaw said the growth of discounters Aldi and Lidl - offering simple contracts and high hourly rates - had pushed others into paying more.

Morrisons’ move above £10 per hour last year was also significant, he added.

Rising wages, combined with other cost pressures such as increasing commodity and energy prices, have reportedly forced supermarkets to look for savings elsewhere. These have included installing more self-service checkouts, cutting back on 24-hour opening and reducing the need for cash handling.

Tesco has targeted £1bn of savings over three years, while Sainsbury’s is looking for £ 600mn.

Much of that will come from incremental changes. Tesco has moved replenishment work into daytime shifts at some stores, reducing the number of staff receiving the £ 2.30 per hour premium for night working. 

Asda changed its definition of “night” to between midnight and 5am.

Layers of salaried store management roles have also been abolished and some labour-intensive services such as delis and hot food counters have been closed.

Changes like these have helped keep total employee costs under control. Although Tesco’s hourly rate has risen by more than 40 per cent in the past decade, its total UK staff costs have risen by 27 per cent. The number of full-time equivalent employees, which adjusts for part-time working, has fallen 12 per cent.

But the £200mn cost of the supermarket giant’s latest pay increase for store staff, along with wage settlements for lorry drivers and distribution centre workers in 2021, show that Tesco and others will need to double their cost reduction efforts elsewhere if wage bills are to stay reined in.

Source: J News

(Quotes via original reporting)

One of the most persistent and intense pressures on British supermarkets is staff wages. This month Tesco became the latest big player to increase basic hourly pay rates above £10, higher than both the statutory minimum wage of £ 9.50 and the voluntary “UK real living wage”, J News reports.

Asda is now the only one of the UK’s largest supermarket chains to pay less than £10 an hour, although it does offer bonuses.

“There has been a market correction,” Nadine Houghton - an organiser at the GMB union - said.

“Working people have more bargaining power and many have come out of the pandemic with different expectations. They have realized they are key workers and expect to be rewarded. ”

Retail is the UK’s largest private-sector employer, with hundreds of thousands of hourly-paid staff in stores and distribution centres, leaving supermarkets acutely exposed to a restricted labour market and minimum wage legislation.

The pandemic prompted a hiring frenzy because supermarkets needed more staff for picking and delivering online orders and as cover for COVID-19 absences. In the UK, Tesco added 20,000 permanent roles during the pandemic and its staff costs have reportedly risen from £4.48bn to £ 4.73bn.

But as a result of the economic reopening, many workers have returned to their previous careers or left the labour force altogether.

According to the Office for National Statistics (ONS), there were 108,000 unfilled vacancies in retail in the first quarter of this year; the highest in more than two decades. While Tesco announced in January that it had about 3,000 unfilled jobs.

Ms Houghton said employers’ attitudes have had to change, especially towards women and part-time workers. “They’re not going to work for pin money.”

Asset managers are also calling for higher wages. Campaign group ShareAction is leading a coalition of investors that is calling on Sainsbury’s to become an accredited real living wage employer and plans to target other supermarkets.

Martin Buttle - head of good work at ShareAction - said, “[Investors] are wanting to show that they are integrating the ‘S’ in ‘ESG’ into their calculations and wages are an important component of that,” referring to environmental, social and governance issues.

Becoming an accredited living wage employer entails matching the real living wage as it rises each year and ensuring that third-party staff, such as security guards and cleaners, receive the higher rate. Currently, Burberry and Ikea are the only major accredited retail employers in the UK.

Sainsbury’s revealed that its pay review this year represented a £100m investment and exceeded both statutory and voluntary living wages.

“As we balance the needs of all our stakeholders. . . it is vital that we not only pay our colleagues fairly but that we are able to invest significantly to offer customers great value,” it added.

In a competitive labour market, a significant move by one company can affect the entire sector. A spokesperson for shop workers’ union Usdaw said the growth of discounters Aldi and Lidl - offering simple contracts and high hourly rates - had pushed others into paying more.

Morrisons’ move above £10 per hour last year was also significant, he added.

Rising wages, combined with other cost pressures such as increasing commodity and energy prices, have reportedly forced supermarkets to look for savings elsewhere. These have included installing more self-service checkouts, cutting back on 24-hour opening and reducing the need for cash handling.

Tesco has targeted £1bn of savings over three years, while Sainsbury’s is looking for £ 600mn.

Much of that will come from incremental changes. Tesco has moved replenishment work into daytime shifts at some stores, reducing the number of staff receiving the £ 2.30 per hour premium for night working. 

Asda changed its definition of “night” to between midnight and 5am.

Layers of salaried store management roles have also been abolished and some labour-intensive services such as delis and hot food counters have been closed.

Changes like these have helped keep total employee costs under control. Although Tesco’s hourly rate has risen by more than 40 per cent in the past decade, its total UK staff costs have risen by 27 per cent. The number of full-time equivalent employees, which adjusts for part-time working, has fallen 12 per cent.

But the £200mn cost of the supermarket giant’s latest pay increase for store staff, along with wage settlements for lorry drivers and distribution centre workers in 2021, show that Tesco and others will need to double their cost reduction efforts elsewhere if wage bills are to stay reined in.

Source: J News

(Quotes via original reporting)