Zoe Woolacott | 09 Mar 2020

Retail pay rises continue to outpace those in wider economy

Not for use before: 00:01 Wednesday 11 March 2020


Retail pay rises continue to outpace those in wider economy


Many retailers are offering higher pay rises than elsewhere in the economy, according to a report on pay and conditions in retail by Incomes Data Research (IDR). The research has found that over a third of all pay increases in the sector were worth 4% or more in 2019 (up from a fifth in 2018), compared with just over a tenth of awards at this level across the economy as a whole.


Most staff in the sector are low-paid, with hourly pay rates for retail assistants tracking the National Living Wage (NLW), and the comparatively high increase in the statutory minimum has meant that more pay awards are above-average than in other sectors. The introduction of, and subsequent increases in the NLW have had a significant impact on the sector, by helping to raise basic pay on the one hand but also prompting changes to other aspects of reward as employers offset wage increases by ending or reducing other terms. For example, Sainsbury’s removed paid breaks in 2018, while at Asda workers on the new ‘Contract 6’ agreement recently lost premiums for most bank holiday working.


Staff bonuses are another discretionary element of reward that seems to have been rowed back on in the wake of the higher minimum wage, though competitive pressures have played a role here too. In some cases, employers have removed annual bonuses altogether as a way of offsetting the costs of higher basic pay rates. ‘We have also observed comparatively higher pay rises for hourly-paid staff at large non-food retailers being offset to a certain extent by lower pay rises, or even pay freezes, for management or head office employees,’ commented Zoe Woolacott at IDR.


Management roles have also been a focus of some food retailers’ restructuring exercises, although this may not necessarily be directly linked to the NLW. Morrisons has announced plans to cut 3,000 managers’ roles following a workforce restructure. However, it also plans to create 7,000 frontline jobs, including skilled butchers and fishmongers. Other firms have reduced headcount. For example, Sainsbury’s reported that it has reduced senior leader numbers by 20%. Meanwhile Iceland has also begun a review of its management structure.


The report examines hourly pay rates and found that while the median minimum rate for adult workers aged 25 and over matches the current NLW of £8.21, almost half the retailers in the sample set their rates above this. The highest rates of pay are found in the food retail sub-sector, where the median minimum hourly rate is currently £9.00 – some 79p (9.6%) higher than the NLW, compared with £8.35 in non-food retail and £8.21 in retail catering.