The UK retailers making ‘record’ investments to raise staff pay

In a retail landscape marked by questions and concerns surrounding financial stability, mounting reports of “record” investments into employee pay suggest there is a light at the end of this gloomy economic tunnel.

Various related announcements that have taken place over the past two months come after the introduction of a revised Real Living Wage in chancellor Jeremy Hunt’s Autumn Statement last year. In his speech, Hunt said that the wage was to increase from 10.42 to 11.44 pounds, representing a 10 percent rise, the “biggest ever increase” to the living wage.

While Hunt presented the move as a method of helping the economy get back on track, concern from industry leaders and small businesses began tumbling in, with many wondering how they were to finance the increase. As such, it is becoming increasingly clear that cutting jobs has been one of the avenues in which to cope, with many large retailers having already announced such plans as part of ongoing cost-saving strategies.

Despite this, it hasn’t stopped those from making what many are calling “record” investments into their wages. Here are some of the retailers doing so:

John Lewis

John Lewis Partnership (JLP) has reportedly said that it will be raising its employee pay by 10 percent, an apparent record for the group, bringing its minimum wage to 11.55 pounds per hour, while in London it will amount to 12.89 pounds. This is according to Retail Week, which said that the retailer is expected to confirm the pay budget in its upcoming financial update next week and noted the total investment would amount to 116 million pounds.

While this report paints a positive picture for the future of John Lewis, it comes amid a challenging financial period for the firm, leading to the execution of a turnaround plan that was ultimately forced to extend to 2027/28. More recent reports, however, have also suggested that the company was likely to be cutting as many as 11,000 jobs, speculation that fell alongside a slash in redundancy payments that is also to come into effect in order to “free up cash”.

Asda

Another that said it would be making a “record” investment was supermarket chain Asda, which said it was looking to raise retail pay by 8.4 percent from July 1, bringing its hourly rates to 12.04 pounds. The investment would total 150 million pounds for the retailer, making it the “highest paying UK grocery” store. It further builds on a previous 10 percent increase to such roles last year.

This news, however, came just days before GMB members at the company’s Wisbech store had voted to strike over claims of reduced hours and an uptick in “bullying management” culture. It was the second Asda store to be faced with such action in recent weeks, after workers at its Gosport location also walked out for two days over similar claims of a “toxic” work environment.

Sainsbury’s

Like John Lewis, Sainsbury’s recent announcement of its increase in staff wage was doubled with the news that it would be cutting around 1,500 job roles across the company. In early January, the supermarket giant announced a 200 million pound investment in wages, allowing it to increase employee pay by 9.1 percent from March.

This, however, was shortly followed with the revelation of impending layoffs as part of the company’s ‘Next Level’ strategy designed to simplify the company’s structure. Shifts have already been proposed to the company’s retail, transformation, HR, supply chain and logistics departments, while it had previously detailed plans to take a “food first” approach to merchandising, tightening its focus on more general ranges, including clothing.

Marks & Spencer

Alongside a number of notable investments into its retail network, department store giant Marks & Spencer said it would be investing 89 million pounds into its retail pay, bringing hourly wages to 12 pounds. From April 1, the company will implement a 10.1 percent increase on last year for full-time colleagues. It will also be making a further five million pound annual investment into its maternity, paternity and adoption policies.

The company had previously been faced with speculation surrounding hundreds of head office jobs cuts this time last year, with reports coming despite the retailer entering a period of growth following years of decline. Marks & Spencer was quick to quash such rumours however, stating that the figure was “simply inaccurate”. Since then, the company has only announced a string of investments into its real estate, including 13 million pounds injected into its Northern retail network and 30 million to go towards its Scottish business.

Tesco

Tesco is another that is preparing to raise wages, having recently secured an agreement with trade union USDAW that would take its hourly rate for store colleagues from 11.02 pounds to 12.02 pounds. Coming into effect from April 2024, the new rate represents a 9.1 percent increase in base pay, amounting to another “record” investment of more than 300 million pounds. Alongside this, Tesco further announced an increase in paternity leave to six weeks fully paid, as well as an increase in maximum company sick pay entitlement to 18 weeks.

The announcement comes just days after the retailer sold its Tesco Bank subsidiary in a one billion pound deal to Barclays. The move takes off 7.7 billion pounds of capital-intensive assets and 6.7 billion pounds of financial liabilities from Tesco’s balance sheet, allowing it to instead focus on its retail empire.