Sainsbury’s is giving its lowest-paid shop workers a second pay rise in a year as well as extra discounts and free food during their shifts in a £25m package to help them cope with rising living costs this winter.
Next month the retailer’s 127,000 hourly paid workers will get a 25p an hour increase to £10.25, with the rate for staff in London stores increasing from £11.05 to £11.30.
The unprecedented autumn pay rise will add £20m to the company’s wage bill and combined with the 5% pay increase in spring will cost a total of £150m.
The investment in pay, as well as the hundreds of millions of pounds being poured into limiting food price rises in its stores, will weigh on profits this year.
“Every day I am hearing from colleagues who are really feeling the pressures of the rising cost of living,” said Simon Roberts, chief executive of Sainsbury’s.
“That’s why we are doing everything we can to help our colleagues as they face rising bills and living costs this autumn. This is the first time we have given two pay rises in the same year.”
The so-called cost of living support package includes £5m to provide food such as toast, soup and porridge in staffrooms as well as deeper discounts on shopping. Workers are entitled to 10% off groceries, and in the supermarket’s sister chain Argos all year round, but they will be given more opportunities to save 15% and 20% in the run-up to Christmas.
With some economists concerned that Britain could get trapped in a 1970s-style “wage-price spiral” – Aldi has also pushed through two pay rises this year amid intense competition for staff – Roberts said it would take action whenever it needed to.
“We had a debate over whether we should leave this until next year or bring forward some of this now, given the challenges of the autumn and winter ahead,” he said.
“We have 127,000 people that get up every day, often in the middle of the night, to get our stores and operations ready for customers. We need to support them as we go into this winter period. Therefore we made the choice to bring forward this pay increase to now.”
The pay increase was announced as data from the grocery industry analysts Kantar showed supermarket inflation rising to a record 12.4% in August, adding £571 to annual household bills.
With budgets under strain, shoppers are buying supermarket own-label products, with the need to save money boosting sales at the discounter Aldi, which has overtaken Morrisons to become the UK’s fourth-largest supermarket.
Roberts said Sainsbury’s was holding its own despite challenging trading conditions and the supermarket had funnelled £65m into making sure its prices were competitive in September. The sum is part of £500m investment in low prices over two years.
“Prices are going up slower at Sainsbury’s than at any of our competitors and that means our volumes are increased,” said Roberts, who added that shoppers were using the retailer’s self-scanning app to monitor their spending.
“The comparison between prices at Sainsbury’s and prices at Aldi have never been so close as they are now,” he said. “Customers are choosing to do more of their shopping with us as they get confident that the prices of everyday products like fruit, vegetables, chicken, dairy and bread, which are really strong.”
