Swedish retailer Ikea has introduced a pay freeze for its UK employees to deal with the ramifications of the Covid-19 (Coronavirus) pandemic.
The organisation, which has paused pay reviews to solidify its financial positioning over the coming months, has also put on hold its plans to become accredited as a real living wage employer. Ikea committed to this accreditation in January 2020, with over 300 employees expecting to receive a pay rise in January 2021.
The living wage, set by the Living Wage Foundation, is an independently set hourly rate of pay, calculated according to the basic costs of living. Employers pay the living wage rate, which is updated annually, on a voluntary basis and currently stands at £8.72 per hour for employees over 25.
In June 2020, Ikea topped up the salaries of any employees that were on furlough, giving them an additional 20% to bring them up to full pay. In September, the organisation also created an emergency fund to help any of its staff that have been financially impacted by the pandemic.
A spokesperson at Ikea said: “As individuals, an organisation and as an industry, we continue to go through one of the most challenging times in our history.
“Although Ikea has performed better than we thought we might at the start of the pandemic, our sales figures are down, and while we are optimistic about the future, we anticipate that the year ahead will continue to be challenging. Our focus remains on protecting as many livelihoods as possible by protecting our organisation in the short term, for the long term. For this reason, we have taken the decision to implement a pay freeze for the next financial year, and have agreed with the Living Wage Foundation that we will not implement any increase in the real living wage, thereby pausing our accreditation this year.
“Throughout the pandemic, we have put our staff first by ensuring all employees were paid 100% for the period they were furloughed, and by providing additional financial assistance for those most severely affected by the pandemic through the launch of our emergency fund, and we will continue to do so.”