Lidl has announced it will pay its staff the Living Wage, bagging itself good publicity, thumbing its nose at its struggling competitors and throwing down a gauntlet to the numerous retailers and restaurants that have said they will struggle to pay the new National Living Wage (NLW).
The German discount supermarket will pay its 17,000 UK staff at least £8.20 an hour from October 1, rising to £9.35 in London. That, it says, will mean 53% of its employees will get an average annual pay rise of £1,200.
That’s a pound an hour higher than the £7.20 NLW that’s coming into force next April. It’ll also be increased if the Living Wage Foundation announces a higher rate at its annual review in November.
‘Lidl employees will be amongst the best paid in the supermarket sector, and that’s something I feel incredibly proud about,’ said UK CEO Ronny Gottschlich. A quick glance at hourly rates on Glassdoor, where employees can anonymously post their salaries, suggests they are the best paid full-stop (Aldi is closest, on £7.94 an hour), although possibly not after Waitrose staff get their yearly bonus.
The Living Wage Foundation was predictably ecstatic. Lidl’s ‘announcement is a massive breakthrough in the Living Wage campaign, and proves that paying staff a real Living Wage, calculated around the cost of living, is possible on the British high-street,’ its director Rhys Moore said. ‘It sets a challenge to the rest of the UK supermarket sector, that has until now claimed that paying staff the Living Wage was just not possible.’
It’s a bold move from a grocer that, along with larger rival German discounter Aldi, has been pulling the rug out from underneath the ‘Big Four’ supermarkets (Tesco, Sainsbury’s, Morrisons, Asda). It takes the wind from the sails of Sainsbury’s announcement a few weeks ago that staff would get at least £7.36 an hour. And it also makes the huffing and puffing from the likes of JD Wetherspoon and Whitbread over the NLW look more and more like hot air.
The move won’t cost privately-owned Lidl a huge amount either: £9m, which is small change compared to its record £4bn UK sales. Tesco, for one, might argue that, with its own recent record £6.4bn annual loss, it has to pinch the pennies on wages. It has restless shareholders to attend to - and ‘every little helps’, after all.
But the Big Four are already struggling to define why customers should shop at them rather than elsewhere, and they can hardly justify higher prices than Aldi and Lidl if they’re not paying their staff at least as much. The ball is now in the Big Four’s rather oversized, out-of-town courts.