Credit: David Anstiss/Geograph

Why Sainsbury's is giving its staff an inflation-busting pay boost

The supermarket needs to repair its brand after a price war of attrition.

by Jack Torrance
Last Updated: 30 Sep 2015

Amid intense competition from old rivals and new discounters, supermarkets are desperately looking for more ways to cut their costs and bolster the bottom line. Fortunately for its shop staff, Sainsbury’s has decided against applying that philosophy to its wage rates.

Today it announced plans to increase its standard rate of pay to £7.36 per hour – an inflation-busting 4% raise that takes its workers above the Government-mandated ‘national living wage’ of £7.20 that will come into force next April. Critics will counter that it’s not as much as the ‘proper’ Living Wage, which the Living Wage Foundation says should be £7.85, but it’s nonetheless a bold move for a retailer that’s trying to pinch pennies.

‘We’re delighted to announce a 4% pay increase for the colleagues who work in our stores across the country,’ said chief executive Mike Coupe, who was interviewed by MT back in June. ‘We know what a difference they make to our customers each and every day and we’re totally committed to rewarding them well for the great service they provide.’

The announcement was packed with further boasts about the supermarket’s employee benefits package, which includes an annual bonus as well as the usual pension, life insurance and employee discount card. All of which suggests Sainsbury’s is keen to take on more high quality staff.

Read more: 'The future has to be about more than groceries' - Sainsbury's boss Mike Coupe

That would make a lot of sense. While it has had to cut costs to some extent to remain competitive, Sainsbury’s can’t win a race to the bottom, and customers do appreciate the decent service that a well-motivated workforce is more likely to offer.

Though its fortunes have improved slightly in recent months, workers at Sainsbury’s have faced a lot of uncertainty in the last year or two. Though the 1,300 job cuts it has already announced have fallen on its support centres and junior management, it’s never nice to see colleagues put back on the shelf.  A wage boost would be a welcome sign to frontline employees that they are valued.

But with analysts warning that the big supermarkets will need to shutter more of their stores to remain profitable, it’s also possible there is a less triumphant motive – that Sainsbury’s is strengthening its employees’ resolve ahead of another round of redundancies.

Either way, one thing is for sure – if a major supermarket in 2015 can afford to pay its employees the ‘national living wage’ then there aren’t many viable businesses that can’t.

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