By Martin Buttle, Head of Good Work, ShareAction

In many respects, 2020 was a successful year for supermarkets.

As people spent more time at home, British food retailers played an even more crucial role in keeping us fed. And therefore they saw a strong financial performance, with record sales in December.

This would not have been possible without an army of key workers. People who put themselves on the front lines of the pandemic – often risking their own health in the process.

As life slowly returns to normality, it's no longer acceptable for supermarkets to undervalue their workers. The spotlight is on them: it's time they pay their workers a Living Wage.

Bringing together investors and companies for a Living Wage in food retail

With this in mind, we joined our partners at the Living Wage Foundation and the Food Foundation to bring together supermarket representatives, investors and food retail experts. We explored how, by working together, we can implement a Living Wage across the sector.

The event: “Coming together for a Living Wage in Food Retail” aimed to kick-start a conversation, looking at solutions to what we may perceive to be stopping the implementation of a higher wages in retail.

Supermarket workers continue to be undervalued and underpaid

As shown in our recent briefing supermarket workers are one of the largest groups of low paid workers in the UK – making up three per cent of all employees and 35 per cent of retail workers.

Yet some 45 per cent of the 900,000 people who work in UK supermarkets earn less than the real Living Wage. On top of this, many workers would like more hours - underemployment among supermarket workers, which sits consistently well above the average, rose in the pandemic. This was despite the rising demand and sales in supermarkets.

With the spotlight of Covid-19, retailers are beginning to shift in the right direction

At our event, investors and retailers had wide-ranging discussions how they could work together to invest in frontline workers.

Sessions focused in on the business and investment cases for Living Wage accreditation, the risk of in-work poverty in the sector, and how investors can best engage retailers on this topic, amongst other important issues.

With the growing spotlight on this issue in the wake of Covid-19, both retailers, and their investors, see staff pay as a growing priority.

Many retailers acknowledged the role their staff played during the pandemic, and offered a variety of improvements in terms of pay. Many have also announced one-off Covid-bonuses.

Aldi, Co-op, Lidl, Morrisons and Sainsbury’ have matched the real Living Wage for direct employees. Despite this, no retailer has formally accredited with the Living Wage Foundation. This matters as the Living Wage accreditation is a public commitment to fair pay, is independently reviewed annually and covers subcontracted staff in addition to direct employees.

As one retailer representative observed: "The case has been made, in the latest pay reviews the gap between the Living Wage and the retailers base rates is closing, retailers are coalescing around similar figures. Once one retailer accredits others will follow suite".

Investors are primed to drive up wages in supermarkets

There is growing awareness that raising wages is the right thing to do, but it also makes business sense.

Raising wages of the lowest paid has demonstrable benefits for supermarkets – and therefore their investors.

Companies that invest in their workforce create operational efficiencies, reduce prices, increase productivity and ultimately ensure happier workers, customers, and investors.

Members of ShareAction’s Good Work coalition agreed to ongoing engagement with retailers on the Living Wage and insecure work. They discussed how to engage companies through fixed income and debt, as well as those in whom they had an equity stake. In the words of one investor: “Gone are the days when we would only engage companies with whom we have a voting right.”

Our briefing sets out practical steps for investors on how to get under the surface of retailers’ initial responses in engagement meetings.

The prize is great – improved pay and conditions for one of the largest groups of low paid workers in the UK.

Read the Investor briefing and toolkit >> Low wage and insecure work in the UK retail sector