During the pandemic, supermarket retail workers were designated key workers in recognition of the crucial role they play in ensuring our societies function. Despite this, last year, 42 per cent of all supermarket workers (366,000 people) earn less than the real Living Wage. Amidst a cost of living crisis, the combination of the rising cost of living, higher national insurance contributions (NICs), Universal Credit cuts, and a freeze on the income tax personal allowance will mean the average supermarket worker in the UK will be £1,040 worse off in 2022. The Independent Food Aid Network (IFAN) says it has seen an increase in supermarket workers using their food banks.
Inflation data continues to show that it is the poorest families who are being hardest hit by the rocketing cost of living. The UK’s Institute for Fiscal Studies has reported that the poorest households faced inflation in the year to April of 10.9 per cent, three percentage points higher than top earners. Those that earn less, spend more of their income on essentials such as food and energy, which are seeing the sharpest price increases.
0%
of supermarket workers earn less than a living wage
0%
of supermarket workers say they want more hours
The disparity in wage rises is only compounding this effect. The Office for National Statistics in the UK recently shared data showing that while median pay has risen 7.9 per cent in the year to April in financial services, wages for retail workers have increased just 3.7 per cent over the same period.
Beyond wages, retail work is insecure. Whilst many retailers do not use zero-hour contracts, almost 20 per cent of workers report they want more hours. During the pandemic, many key workers bore the stress of working through lockdowns at personal risk and in situations of economic insecurity, with 67 per cent of supermarket workers reporting their role has not been acknowledged by the public. Workers also have raised concerns about poor visibility of hours and limited sick pay.
With a tight labour market, supply chain challenges, and the rising cost of living set against concerning geopolitical shifts as a result of the war in Ukraine, the supermarket sector is facing a challenging and uncertain future.
Nevertheless, quarterly results have been good, reflecting strong sales growth and reduced operating costs as we move past the pandemic. In April 2022 Tesco reported in the UK and Ireland an adjusted operating profit of £2.4bn, which was up 35.4 per cent due to higher sales and lower COVID-19 costs, and Ocado reported in February 2022 sales up 4.6 per cent at £2.3bn, notwithstanding material headwinds from Covid-19. Sainsbury’s reported an underlying profit before tax of £730 million, up 25 per cent versus for the year 2019/20 and up 104 per cent compared with the year 2020/21, which included substantial COVID-19 costs, despite ‘significant external pressures and uncertainties’. Sainsbury’s added that it continued to expect strong cash flow and pledged to increase the proportion of profits paid out to shareholders to 60 per cent.
The retailers acknowledged the role their staff played in this success and have offered a variety of improvements in their terms and pay, as well as announcing one-off Covid-bonuses. However, these benefits have been short-lived with supermarkets rescinding these benefits and rolling back Covid specific sick pay policies. Aldi, ASDA, Lidl, Morrisons Sainsbury’s and Waitrose have matched the real Living Wage for direct employees[1]. Despite this, no supermarket retailer has formally accredited with the Living Wage Foundation.
Even before the pandemic, the business case for improving wages and conditions for the low paid was already established. Inequality and in-work poverty are ongoing challenges to our societies weakening civil society, contributing to political instability, and weakening aggregate economic growth. Raising wages for the lowest-paid therefore has knock-on impacts that benefit wider society. 49 per cent of female workers and 44 per cent of minority workers earn less than the real Living Wage, compared to 35 per cent of men and 41 per cent of white workers. Covid-19 and the cost of living crisis have exacerbated existing inequalities. As we emerge from the pandemic, raising wages and addressing the quality of work for those in the most insecure and lowest paid jobs is more important than ever. Accrediting as Living Wage employers is an important step in ensuring workers' wages cover the cost of living.
[1] At least for UK retail workers it is unclear whether cleaners, security guards and other contract workers are covered. Sainsbury's only match the UK rate but not London rate. Similarly for Morrisons there is a some areas in London where rates are not matched.