Tesco has awarded its shop floor staff a 10.45% rise in hourly pay over the next two years to £9.30 an hour but offset it by ditching their annual bonus.
In September the supermarket will increase minimum hourly pay for its store and warehouse workers from £8.42, one of the lowest rates among the grocers, to £9 an hour, bringing Tesco into line with current rates paid by Lidl and Asda and ahead of Morrisons. However, Morrisons staff, who are expected to get a pay rise this autumn, receive a bonus equivalent to up to 3% of annual salary.
The Tesco pay rise, equivalent to nearly £1,200 for someone on a 30-hour week, will be offset by a loss of an annual cash bonus, which amounted to a maximum of 3.5% for all staff this year.
The cut in bonus for shop floor workers comes after Tesco’s chief executive, Dave Lewis, banked a £1.6m annual bonus this year, taking his total annual payout to £4.6m.
© Reuters Tesco CEO, Dave Lewis
The Labour MP Siobhain McDonagh, who has campaigned for better pay deals for retail workers, said: “Usdaw has done a brilliant job in securing a pay rise for tens of thousands of staff in Britain’s largest supermarket. But how can it be right that a chief executive takes home millions of pounds in bonuses while he removes the entire shop floor staff bonus scheme? Are his staff not worth £9 an hour plus their annual bonus?”
Until a second pay rise takes effect in October 2020, lifting pay to at least £9.30 an hour, Tesco workers will still earn less than their counterparts at Aldi, who earn £9.10 an hour, and Sainsbury’s, where staff have earned £9.20 an hour since September last year. Sainsbury’s staff, who lost the right to paid breaks and bonuses in favour of more in hourly pay in 2018, have been promised another review of their pay in March 2020.
Major retailers have been forced to improve their hourly rates for shop floor staff after a near 5% rise in the legal minimum wage to £8.21 an hour from April and increasing competition for workers as a result of a tight employment market, partly resulting from uncertainty for EU workers linked to Brexit.
However, pressure on costs, including rising business rates and a drop in the value of the pound, which has made buying goods from abroad more expensive, have also led businesses to trim back staff perks including paid breaks, premium pay for unsocial hours and annual bonuses.
Amazon increased hourly pay rates for UK workers to £9.50 an hour from November last year but offset about half the average rise by taking away share bonuses.
Jason Tarry, the chief executive of Tesco’s UK business, said: “We are delighted we have been able to offer our colleagues a pay increase of over 10%, despite the significant economic challenges and uncertain times many retailers are currently facing. Together with our other colleague benefits, it makes our total reward package more competitive than ever before.”
Pauline Foulkes, national officer of the shopworkers union Usdaw, said: “Usdaw has negotiated a two-year pay deal with Tesco that amounts to over 10% and will take the basic rate to £9.30 per hour by October next year. This significant increase, which includes the incorporation of the colleague bonus into hourly pay, means the basic rate will be equal to the current real living wage rate of £9 per hour by September this year. We continue to work towards a £10-per-hour minimum as set out in Usdaw’s Time for Better Pay campaign.”