Zoe Woolacott | 12 Dec 2020

Pay in retail and retail supply during the 2020 pandemic

Diverse trading conditions since the first national lockdown have produced a more varied landscape on pay for workers in the retail and distribution sectors. On one hand the pandemic has boosted activity in the food retail and fast food areas but on the other hand it has resulted in a significant loss of trade for non-food retailers and pubs and restaurants. These differing outcomes have also impacted the supply chain for the businesses that supply them – with a surge in recruitment for supermarkets, such as Morrisons and Tesco, and for takeaway providers such as Domino’s. 

Employers have reacted in a variety of ways across the sectors with bonuses and agreements to uplift pay set in motion at some firms, while others have had to retrench. For example, Aldi awarded a 10% bonus to staff in April and November this year as a thank-you for managing increased demand and the Co-operative Group pledged to increase pay next year so that their lowest-paid workers will earn the voluntary ‘Living Wage’, recently uprated to £9.50 an hour outside London. Meanwhile struggling businesses have had to place workers on furlough and freeze or, in some cases, temporarily cut pay. 

Pay awards

In the retail sector, half of all pay awards were worth 3% or more in the 12 months to September. This is much higher than across the economy as a whole where only around a quarter of increases are at this level. At the lower end of the distribution, the proportion of freezes is lower in retail than across the economy – at 9% and 13% respectively. Meanwhile in transport, the distribution of pay awards for drivers and warehouse staff shows a broadly similar pattern to pay awards across the whole economy with the largest cluster of awards occurring between 2.0% and 2.99% and the proportions of pay freezes are a little closer at 10% and 13% of firms respectively.

A closer look at the retail sector shows differences in respect of pay outcomes between retailers classed as ‘non-essential’ during the national lockdowns and those with fewer restrictions, such as supermarkets. Retailers classified as ‘non-essential’, such as clothing outlets, are more likely to have frozen basic pay or awarded a lower increase to employees than other ‘essential’ retailers, such as supermarkets, DIY stores and outlets selling both food and home products, such as Home Bargains or Poundland.

The distribution of pay settlements among ‘essential’ retailers shows that two-fifths of awards are worth 4% or more, with no instances of pay freezes in the 12 months to September. Pay outcomes at ‘non-essential’ retailers show only one-in-ten awards at or above 4% with almost a third (30%) of outcomes resulting in a pay freeze. These differences in the distribution of pay within the wider retail sector clearly highlights the impact of the changes to trading conditions as a result of the pandemic.