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Shareholders file Living Wage resolution at Sainsbury’s

42 per cent of all supermarket workers in the UK earn less than the real living wage and no supermarket is currently accredited as a Living Wage Employer.

(Monday 28 March, London) An investor coalition managing £2.2 trillion has filed a shareholder resolution at Sainsbury’s PLC, calling for the company to commit to paying a Living Wage to all workers. It is the first shareholder resolution calling for a listed firm to become a Living Wage accredited employer.

The coalition was brought together by responsible investment NGO ShareAction and includes the UK’s largest asset manager, Legal and General Investment Management, and the largest workplace pension scheme, Nest. It also includes 108 individual shareholders, including MPs Siobhain McDonagh and Helen Hayes.

Half of the FTSE 100 are now among over 9,500 accredited Living Wage employers, a group that also includes retail giant IKEA, but no supermarket has yet accredited. Despite official recognition of their status as ‘key workers’ during the pandemic, supermarket workers continue to be one of the largest groups of low paid workers in the UK.

Martin Buttle, Head of Good Work at ShareAction, said: “Low paid workers in the supermarket sector are being hit incredibly hard by rising living costs, yet we all owe them so much following the pandemic. We hope this resolution will catalyse long overdue change. The directors of all supermarkets that aren’t accredited as Living Wage employers should be asking themselves why not and taking steps to put things right by their workforce before their investors force the issue.”

Sainsbury's is the second largest U.K. grocery chain with 16.5% of the market. It operates over 600 supermarkets, 800 convenience stores and directly employs 189,000 workers. In January it reported expected profits of at least £720m, while its CEO took home £1,319,000 last year.

Sainsbury’s workers, by contrast, are facing a cost of living crisis. According to Resolution Foundation, the conflict in Ukraine could push peak inflation in 2022-23 above 8 per cent. This could leave the real household income 4 per cent – or £1,000 – lower than in 2021-22. This will be compounded by higher National Insurance Contributions, Universal Credit cuts and a freeze on the Income Tax Personal Allowance.

The Independent Food Aid Network (IFAN) reported that it had seen an increase in supermarket workers using their foodbanks over the course of the pandemic, while research conducted by Organise found that 1 in 3 Sainsbury’s workers regularly worried about putting food on the table.

Siobhain McDonagh, MP and resolution co-filer, said: “This will be my second time attending Sainsbury’s AGM, continuing to fight for fair pay for all of their longstanding and loyal staff. In the heart of a cost of living crisis, it has never been more important for Sainsbury’s to pay all of their colleagues fairly – and given that they made underlying profits of £720m in the last year they can have no excuse!”

Lianna Etkind, foodbank volunteer and resolution co-filer, said:

“Many foodbank users are low-paid workers, sometimes working long hours but still forced to resort to foodbanks when their wages won't stretch to cover everything. It made me so angry to see that big supermarkets - including Sainsbury’s - would have collections in store for foodbanks, presenting themselves as responsible, community-minded businesses, yet not pay their workers enough to live on. It's just not right that such essential workers should have to survive on poverty wages while executives get six figure salaries.”

In January, Sainsbury’s announced new pay rates for its directly employed staff, with basic hourly pay of at least £10/hour. The new rates will see it match the real Living Wage for staff in inner London and outside the capital. However, its rate of £10.50 for workers in outer London is considerably lower than the real Living Wage for that region (£11.05).

Moreover, Sainsbury’s have not made any commitment relating to the pay of third-party staff, such as cleaners and security guards. These are amongst the most vulnerable workers in the most insecure work. Excluding third-party staff from pay uplifts creates incentives for businesses to increase their use of outsourcing, reinforcing the growth of insecure work.

Furthermore, Sainsbury’s have made no commitment that pay will continue to increase in line with the cost of living in future years. Accrediting as a Living Wage employer would remove this uncertainty and guarantee all workers a wage that they can live on.

There are well-documented business benefits of paying higher wages, including higher staff engagement, higher productivity, reduced turnover and training costs. Research by the MIT Sloan School of Management shows that adopting good employment practices, including base pay rates above minimum wages, can drive increased service quality, productivity and a reduction of costs in the long term.

While this resolution is being filed at Sainsbury’s, the investors in the coalition are making the same ask of all UK supermarkets and will send letters to this effect next week.

Diandra Soobiah, Head of Responsible Investment, Nest:

“We want to see sustainable, long-term business decisions from the companies in our portfolio, such as paying staff and their contractors a living wage. Research shows a fair salary helps sustain a more productive, motivated workforce who are likely to stay longer with the organisation. That’s why we’ve co-filed this shareholder resolution and will continue to encourage large UK companies we’re invested into to become accredited Living Wage employers.

We’ve all seen first-hand the important role supermarket workers played during the pandemic, a timely reminder that the most valuable asset a company has is its workforce.”

Angeli Benham, Senior Global ESG Manager, Legal & General Investment Management:

"The cost of living crisis does not discriminate between those living in inner or outer London. It does however discriminate between those on incomes that can shoulder the additional financial burden and those on low incomes who cannot. Some working households that were previously teetering on the edge of poverty may now be pushed over the edge.

Sainsbury’s is a reputable household name that LGIM’s clients have been invested in for decades. Sainsbury’s has demonstrated its passion and dedication for being a responsible business through supporting community projects and taking action to minimise its impact on the environment. We welcomed its announcement in January, to raise the pay for many working colleagues. We have co-signed this shareholder resolution because we believe all employees, both direct and indirect, who are helping Sainsbury’s to be a sustainable, reputable and impactful business deserve to be paid the real living wage."

Helen Price, Head of Stewardship, Brunel Pension Partnership:

“Low pay and income inequality are not only unjust; they also reduce economic growth, perpetuate existing gender, ethnicity and pension pay gaps as well as creating opportunities for modern human slavery to propagate. It is the duty of responsible investors to manage these risks by setting minimum standards for corporate conduct, such as via Living Wage accreditation.”

Marie Payne, Responsible Investment Officer at ACTIAM:

“ACTIAM believes that sound capital management, including the distribution of an income that provides decent living, have a positive impact on businesses delivering shareholder value. There is a clear link between decent living wages and improved reputation, increased motivation and productivity, higher employee retention rates and lower training costs. We therefore welcome the continued dialogue with Sainsbury’s on the topic and the submission of a shareholder resolution asking the company to become an accredited Living Wage employer. This would pave the way for more companies to follow”.

Jenn-Hui Tan, Head of Stewardship & Sustainable Investing, Fidelity International:

“The pandemic highlighted the vital role of supermarket staff as key workers underpinning our economy and society. With public support for fairer pay for these workers at an all-time high, now is the time for the supermarket sector to step up and guarantee living wages for all staff. Sainsbury’s have an opportunity to be the first to set this new standard and encourage others to follow suit.”

Jonathan Levy, Investment Portfolio Manager, Joseph Rowntree Foundation:

“Becoming an accredited Living Wage employer and helping ensure all workers can have a decent standard of living is a vital step for UK companies committed to reducing poverty among their workforces. Crucially, Living Wage accreditation encompasses third party contractors, such as cleaners and security guards, many of whom are low paid and do not always appear on official company payrolls, despite playing critical roles in businesses’ ability to operate. We are urging Sainsbury’s to seize the opportunity to become the first supermarket in the UK to commit to paying both directly and indirectly employed staff a real Living Wage. In doing so it will be setting a new standard for others to follow.”

Rachel Kay, Researcher at the High Pay Centre and resolution co-filer:

“Sainsbury’s could not function without its workers; it therefore has a responsibility to provide them with a decent standard of living. There is certainly the potential to distribute pay more fairly at Sainsbury’s, as in 2021, its CEO received 122 times the pay of its median worker.”

Mukhtiar Singh, Barrister, Doughty Street Chambers and resolution co-filer, said:

“Quite rightly, the NHS was applauded throughout the pandemic. However, supermarket workers should also be applauded as key workers who kept the country fed during those appalling times. Whilst many sat at home on furlough, supermarket staff put their health at risk and worked on very little pay.

I filed this resolution with ShareAction because I share its values and see opportunities to be far more impactful through shareholder action compared to my profession of employment litigation. Shareholder actions are a far more efficient way of improving workplace conditions and pay; and ensuring that a company achieves and retains its moral compass.”

David Campanale, former BBC broadcaster, current Lib Dem parliamentary candidate for Sutton & Cheam and resolution co-filer:

“Earlier this year, Sainsbury's dropped its marketing slogan - "Live well for less". It was a timely move, as living well as a Sainsbury's worker is far harder than it need be. Too many have to live on less than others in their sector. If they act on fair pay, workers can then say of Sainsbury's they've taken to heart a previous marketing maxim: Making life taste better.”

Danny Gazzi, retired business owner and resolution co-filer:

“As a taxpayer, I object to subsidising Sainsbury’s because the pay of many of their staff is so low that they qualify for a top up through Universal Credit. This is morally wrong! The Living Wage is not a fortune by any means, but a commitment to paying it would be an improvement over the current situation.”

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