Sainsbury’s gave 137,000 store-based workers a 4% salary increase on 30 August, increasing the supermarket’s standard rate of pay to £7.36 per hour.
This is the highest pay increase that Sainsbury’s has awarded to store staff in more than a decade, and takes the average salary above the government’s new national living wage of £7.20 for workers over 25, which is due to come into effect in April 2016.
“This is a good announcement that comes in the wake of a fierce price war among the supermarkets. Many people believe that the government’s new national living wage is likely to result in higher prices for customers.
“A widespread assumption within the retail sector is that [organisations] have no choice but to offer low wages because if retailers, whose business models entail competing on low prices, make greater investments in employees their customers will have to pay higher prices.
“Labour costs form a high proportion of a retailer’s expenses and are generally perceived as a cost-driver rather than a sales driver, so most retailers tend to focus on minimising labour costs by paying low wages, offering few benefits and little or no training.
“Retailers that hold such beliefs will miss out on the opportunity to improve their own performance, as well as contribute to creating the kind of jobs that the UK economy really needs. When supported by the right type of operating practices, retailers can not only compete effectively on prices but also keep customers and employees satisfied.”
Shainaz Firfiray, assistant professor of organisation and human resource management at Warwick Business School