ldi will increase the number of employees Pay in September for the second time this year in a move that has pushed competition between retailers Keep up staff a the cost of living crisis, as well as the risk of rising inflation become embedded in the UK.
London workers at the budget supermarket chain are getting £11.95 an hour, an increase of £11.55, above the Living Wage Foundation’s recommended “real living wage” of £11.05 in the capital. Outside of London, the hourly rate goes up to £10.50 from £10.10. The company, which claims to be the UK’s highest-paying supermarket, said the move would bring its “investment in wages” to £43 million this year, following the earlier increase five months ago.
The rising wage bill for Aldi’s 26,000 employees comes at a time when the costs of a weekly store are already skyrocketing. Research by Kantar, the market data agency, found that food price inflation was 9.9% in the four weeks to July 10, up from 8.3% in the previous month.
Falling purchasing power has drawn shoppers to Aldi and its rival and fellow German discounter Lidl, as shoppers seek ways to contain rising costs. Kantar found that Aldi’s sales had increased by 11.3% over the same period, while Lidl’s had increased by 13.9%.
Higher wages for workers will help them cope with rising prices, but there is also the risk of a wage-price spiral, increasing the costs of companies and thus fueling further inflation. The Russian invasion of Ukraine rocked a series of global markets, including those for food such as wheat and sunflower oil, with the biggest impact on fuel prices.
Tight labor markets and mounting calls for higher wages, plus a wave of industrial action in parts of the economy, have left those responsible for price stability in the UK thinking worse is on the way. The Bank of England predicts inflation will top 11% in October, just as the autumn weather will see millions of people face steep increases in heating costs as the seasonal cold arrives.
Payment in supermarkets has been an important theme for investors this year. Sainsbury rejected a formal motion by some of its own shareholders to introduce Living Wage, which is independently established by the Living Wage Foundation, as a minimum for its workforce. The company – which it already pays to directly employed staff – argued that it should set wages itself alongside stakeholders and defeated the move, which was only supported by about 17% of the votes cast.
Tesco opposes outsourcing one of its largest costs to a third party, citing its regular wage negotiations with unions.