Supermarket pay: a game where the stakes keep getting raised

The issue of supermarket pay is a hot topic right now.

Only last month Sainsbury’s faced investor pressure from ShareAction to pay a living wage to all its workers after it announced plans in January to increase hourly pay for staff to at least £10 per hour, with those in inner London receiving £11.05. Now Sainsbury’s has announced plans to raise pay for store staff in outer London from £10.50 to £11.05, the same rate as those in inner London.

Meanwhile Tesco has also increased pay. Following negotiations with Usdaw, it last week announced a 5.8% pay deal for staff, whose hourly rate will increase from £9.55 to £10.10 from 24 July. So that’s 10p more than Sainsbury’s, though Tesco workers in London will earn £10.78, which is slightly less than at Sainsbury’s. 

Tesco also increased its staff Clubcard discount allowance by £500, taking the annual total allowance for all colleagues to £1,500 effective since 1 April 2022. That should hopefully create some motivation and loyalty in a world in which what would normally be an incredibly steep pay rise won’t leave staff better off.

What’s particularly interesting about the Tesco pay increases, however, is the introduction of a more flexible working structure, with all B/C grade staff set to get the new job title of ‘Tesco colleague’ from October as well as training on checkouts, picking online orders and replenishing shelves. 

Big deal, you say? Perhaps. But this job title is about more than words. It means that while Tesco staff will still have a ‘primary department’ where they’ll work most of their contracted hours, they’ll also be able to work across other teams in stores or CFCs when needed.

This flexibility will help Tesco “keep a good service for its loyal shoppers at a period when it’s very hard to cover staff”, says David Sables, the well-known Tesco commentator at Sentinel Management Consultants. 

Crucially, it will also help the retailer reduce overtime costs, which are a “particular problem when we’re facing lots of absentees because of Covid situations”, suggests Sables, enabling Tesco to fund the retailer’s £200m investment in wages, upskilling and staff loyalty perks.

With Tesco and Sainsbury’s now set to join Morrisons, Aldi and Lidl in paying at least £10 an hour, Asda has been left the lowest payer among its big four and discounter rivals.

In February, Asda announced a 7.35% pay rise for its staff would be spread over the next two years – meaning its hourly pay would increase by just 3.25% this month to £9.55, and then again to £10.06 from April 2023.

At the time, shopworkers union Usdaw described the plans as “a crippling de facto wage cut” for Asda’s 123,000 retail staff.

Asda is also facing pressure from GMB Union, which recently published research claiming more than half of Asda’s workers have been forced to use payday lenders, food banks or borrow money off family and friends in the past 12 months.

It will be interesting to see if Asda follows Tesco and Sainsbury’s in bowing to pressure over pay. After all, unlike its rivals, it doesn’t need to worry about activist investors.

But as the pay gap widens with the rest of the big four and the discounters, it risks losing staff at a time when employment is already a huge challenge.