The UK’s second largest supermarket chain is to reward store staff with an inflation-busting pay hike this year, months after warning that customers will be paying higher prices to offset budget tax hikes.
Sainsbury’s said on Friday, while revealing strong Christmas sales, that the group’s hourly-paid workers would get a 5% rise worth more than £1,100 a year on average.
The award would be “split into two separate increases to help manage a particularly tough cost inflation environment”, the chain explained, with the rises due to be implemented in March and August.
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The pay rise would apply to both Sainsbury’s and Argos workers “for delivering leading service and productivity”, the statement added, claiming that it would mean the company would be “the best paying UK grocer from March”.
Sainsbury’s boss Simon Roberts was among business leaders who publicly spoke out after October’s budget, which put firms on the hook for the bulk of £40bn in tax increases.
He warned then that additional costs would result in higher prices for customers as the chain did not have the “capacity to absorb” a “barrage of costs”.
Sainsbury’s, he said, was facing an additional annual bill of £140m from April to cover the cost of additional employer national insurance contributions alone.
Industry bodies have widely spoken of how higher costs will choke investment and jobs.
They also sounded alarm on the likely path for pay awards.
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Sainsbury’s announcement signals a priority on staff retention in a tough labour market.
Mr Roberts said on Friday that the company would look “very carefully” at any future hiring and also stated that shoppers were very value conscious.
It remains to be seen whether the company and its rivals choose to reduce their margins or pass extra costs on to customers at the tills.
But the British Retail Consortium declared this week that shoppers would be footing the bill.
April looks set to usher in a horror show for family finances.
There are forecasts of higher energy bills due to rising wholesale prices, while water bills and council tax are also due to rise widely by more than the rate of inflation.
Sainsbury’s said its pay awards would help staff navigate the higher price environment.
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It reported that group sales, excluding fuel, rose 2.7% over the 16 weeks to 4 January, driven by strong momentum in its grocery business as Argos sales dragged.
The company hailed a fifth consecutive Christmas of grocery market share gains and said it was on track to meet its profit guidance for the financial year.
Shares, however, fell by more than 2% – building on recent losses among other listed retailers amid warnings of the tough outlook for consumer spending.
