As the cost of living continues to rise across the UK, competition among retailers to offer attractive wages has intensified.
Several major UK grocers have announced significant increases to their hourly pay rates, with some going above and beyond to secure their place as the best-paying employers in the retail sector.
In the battle to be the UK’s best-paying supermarket, it is the two German discount supermarket chains that are forcing the pace.
The latest bout saw budget supermarket Lidl match its rival Aldi as the best paying supermarket employer after committing to paying its shop floor staff up to £14 an hour.
Lidl payrise
The latest increase from Lidl GB, which trades from 980 stores, will see it from September 1 raise entry-level staff pay from £12.75 an hour to £13 nationally, rising to £13.95 pounds for more experienced workers.
Staff in London will see higher rates with hourly pay moving from £14 to £14.35 and climbing to £14.65 for longer-serving staff.
The September increases apply to customer assistants, shift managers, warehouse operatives as well as cleaners, it said, adding that workers will also get a 10 per cent in-store discount and other benefits.
The Lidl GB move marks its fifth pay increase in two years. The uplift takes the discount supermarket’s total investment in wages to more than £70m over the period.
Aldi payrise
The move comes just weeks after Aldi revealed it was set to become the first UK supermarket to pay its store staff at least £13 an hour nationally from September 1, after vowing to “never be beaten on pay”.
Giles Hurley, Aldi UK and Ireland chief executive, said its pay deal was firmly linked to staff performance, saying: “We firmly believe that our colleagues are the best in the business, so it is only right that they remain the best-paid and we are committed to never being beaten on pay by any other supermarket.”
Aldi also offers all staff paid breaks, which the grocer has said is worth around £1,370 a year.
Both discount supermarkets are thriving. Stephanie Rogers, Chief People Officer at Lidl GB, said: “Over the last two years, we’ve held our spot as the fastest growing bricks-and-mortar supermarket. This continued success is made possible because of the ongoing efforts of our colleagues.
Fierce competition between grocers is a key reason for the wage race currently taking place between supermarkets says Dan Coatsworth, investment analyst at AJ Bell. “Most grocers are paying more than the national minimum wage. The sector is highly competitive with most concentrating on selling high volumes with low margins. To do this they need to be hugely efficient, well-oiled machines and good quality staff is an important part of this.
“They realise that customers have no great loyalty. If they go into a supermarket and cannot find something or some other part of the service is lacking, customers will simply go elsewhere.
“They cannot risk alienating customers and they know that happy staff is an important part of that. Paying them well is just one way of recognising that and help keep them happy. They need to pay workers well not just to attract them in the first place, but also retain them because staff churn is time-consuming and costly.”
He said the pandemic also helped to change the status of the supermarket role. The vital role of workers in keeping people fed during the Coronavirus crisis became clear to people. “Supermarkets provided an essential service. People saw what staff did and appreciated it.”.
The Minimum Wage
Experts say another key driver is increases in the minimum wages and the Government’s determination to help raise wages for the lowest paid. The National Minimum wage is a tiered system with different rates for a variety of age groups.
The National Living Wage, the highest band of that tiered system is currently £12.21 an hour. Earlier this month, the body which effectively sets the rate said it is likely that it will need to increase to £12.71 next year to keep up with the Government’s goal for it to match two-thirds of median earnings.
The “real” Living Wage, independently calculated based on the cost of living, is £12.60 per hour nationally and £13.85 per hour in London.
Abi Rose, at the Living Wage Foundation, said: “Many major supermarkets continue to offer wages above the statutory minimum to remain competitive in attracting and retaining staff.
“One factor contributing to this is the influence of the real Living Wage, which has become a widely recognised benchmark for decent pay. Even employers who aren’t formally accredited as Living Wage Employers often align their minimum rates with Living Wage levels. This has helped raise pay standards across the industry, benefiting hundreds of thousands of low-paid workers.”
The state of the UK’s labour market is currently unclear, in part because of question marks around the accuracy and effectiveness of the figures collected by the Office for National Statistics.
Rising wages suggests the market is tighter than some observers think it is. James Walton, chief economist at the Institute of Grocery Distribution (IGD) said: “Despite data suggesting the UK labour market is weakening with businesses reducing recruitment, the retail sector remains a major employer.
“UK retailers employ about 2.6m people, with around 1.1m of those in grocery retail. Attracting and retaining staff is a huge challenge and competitive pay is a large part of the appeal.
“Alongside higher labour costs, comes the need for increased productivity, to deliver added value from each hour worked. That is why mechanisation and skills are so important to retail employers as these are the main levers that make labour more effective.
“To support the need for skills development, IGD’s Learning programme enables employees throughout the industry to grow their skills across career stages. We also have a cross industry campaign kicking off again next week called Mmmake Your Mark, which is designed to attract talent into the industry by showcasing the breadth of inspiring careers available.”
Union battle
Unions representing shop workers have also welcomed the increases but warn many of their members are still struggling to pay bills. Joanne Thomas, general secretary of the shopworkers union Usdaw, said: “We welcome that pay across the sector is increasing, something that reflects the increased cost of living pressures faced by retail workers as well as their contribution to the sector, the economy and our communities.
“Even with these pay rises, we cannot forget that workers are still struggling to make ends meet. Many of our members are still struggling to pay their bills, something which is having a detrimental impact on their mental health.
“Whilst pay remains essential to ensuring these issues are dealt with, it is also vital that employers also listen to the views of their workforce to fully understand the challenges they are facing. That is why we continue to call on Lidl to recognise Usdaw and give staff an independent trade union voice.”
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