Tesco has announced that store staff on £9.55 an hour will be paid £10.10 from July. That’s a 5.8pc wage rise, which sounds pretty generous.
Consider, though, that the Office for Budget Responsibility (OBR) is forecasting 7.4pc inflation this year – with many predicting an even steeper rise in the cost of living over the next 12 months.
As such, Britain’s largest retailer – our biggest private sector employer, in fact – has just given staff a pay rise well below even official inflation estimates. In other words, a real-terms wage cut.
Tesco says this pay settlement “recognises the vital role our colleagues play in our business now and in the future”. Others might argue the supermarket giant – on course to make profits of £2.6bn this year, up from £1.7bn in 2021 – is being mean.
Whatever your view, there seems to be something of a pay war between the big supermarkets, as they struggle to fill vacancies and retain staff. Or, at least, the major players are not letting their rivals get ahead.
Aldi shifted staff to £10.10 per hour back in February, with Lidl following suit – setting the same wage in March. Now Tesco, just as the statutory minimum wage has risen from £8.91 to £9.50 per hour from the beginning of April, has pledged to match Aldi and Lidl – not now, but in three months’ time.
Waitrose and Sainsburys have also recently raised their hourly wage rates, so there does seem to be some wage competition going on. Or, with the rates offered barely above the legal minimum, perhaps a better term is “wage matching”.
With headline inflation approaching double digits, and the cost of living squeeze tightening, I suspect a lot of UK workers over the coming months will push for much higher pay.
Supermarket staff are often part-time, and what they do, while obviously vital, is relatively low-skilled. So they don’t have much bargaining power. Yet across a range of other sectors with skills shortages – transport and logistics, for example – we’re now heading for high wage inflation and/or industrial action.
Average earnings rose just 3.8pc during the year to January, on official figures. The Consumer Price Index, during that same period, was up 5.5pc. This amounts to the biggest drop in real wages since 2014.