Industry

UK Supermarkets Under Pressure to Pay Workers Fairly

Living wage resolution filed at Sainsbury’s will serve as an example to peers, says ShareAction’s Buttle. 

An increasing number of investors expect the UK’s supermarket sector to pay its workers a fair living wage that matches inflation rates during the cost-of-living crisis, according to Martin Buttle, Head of Good Work at ShareAction.  

The responsible investing NGO filed a shareholder resolution against the supermarket chain in March, calling for Sainsbury’s to commit to becoming an accredited living wage employer. It will be voted on during the firm’s annual general meeting (AGM) this Thursday. 

“Having engaged with the supermarket sector on fair pay since 2013, we see this resolution as a way to address living wage and drive workers’ rights-related improvements in the supermarket sector as a whole,” Buttle told ESG Investor.  

The resolution was backed by an investor coalition collectively managing £2.2 trillion in assets, including HSBC Asset Management, Legal and General Investment Management and workplace pension scheme Nest.  

In April, Sainsbury’s responded to the resolution by agreeing to raise pay for staff in outer London stores to £11.05 per hour, but this didn’t extend to third-party contractors (such as security guards and cleaners) and the supermarket didn’t commit to ensuring that pay continues to meet the sharply rising cost of living.  

The Independent Food Aid Network has reported that there has been an increase in supermarket workers using their foodbanks over the course of the pandemic. Meanwhile, Sainsbury’s CEO Simon Roberts received a total remuneration package of £3.8 million in the latest financial year.  

The deal triples Roberts’ pay, after he forewent his bonus during the pandemic, and is 183 times larger than that of the median worker at the supermarket. Sainsbury’s isn’t the only retailer to face votes on pay this week. Twenty-nine percent of M&S shareholders voted against a £1.6 million bonus pay out to former CEO Steve Rowe on Tuesday. 

The real living wage is calculated annually by the Resolution Foundation and outlines the minimum pay that represents an acceptable standard of living. By agreeing to become an accredited living wage employer, Sainsbury’s would commit to paying all its London staff £11.05 per hour and £9.90 per hour across the rest of the UK, the future rate depending on inflation. 

“A number of investors have been alive to low pay issues and the implications for workers during the cost-of-living crisis,” said Buttle. 

Since it was filed, the resolution has garnered strong support, with shareholders such as Aviva Investors, the Coal Pension Trustees and Global Systemic Investors publicly declaring that they will back it. 

“In the short term, this is a resolution that investors can support to demonstrate that they are prioritising workers as part of their commitment to addressing social-related issues,” Buttle added.  

Systemic inequality 

The present cost-of-living crisis is fuelling the systemic long-term risk of growing pay inequality, said Buttle. 

In April, the UK’s Institute for Fiscal Studies (IFS) noted that the bottom 10% of the UK population in terms of income face a 10.9% inflation rate – three percentage points higher than the inflation rate of the richest 10%. 

With rising inflation, stagnating wages and rapidly rising energy bills – including concerns that the energy price cap could reach £3,000 by the autumn – 23.5 million people in the UK will be unable to afford the cost of living this year, said the New Economics Foundation think tank. 

Rising pay disparity was evident before the Covid-19 pandemic and the cost-of-living crisis. The top 1% wealthiest in the UK received 15% of fiscal income between 2018-19, the IFS said, adding that this was more than cash flows directed to the bottom 55% of the UK population combined. Forty-four percent of the top 0.1% of wage earners in the UK work in the finance sector, IFS added. 

“All supermarkets – all companies – should be making sure that their lowest paid workers, including sub-contracted staff, are paid a wage that allows them to cover their cost of living during a time of crisis where they are disproportionately impacted by rising inflation,” said Buttle. 

Buttle admitted some investors have been concerned about putting Sainsbury’s at a “competitive disadvantage” in a tight labour market due to the loss of workers following Brexit.  

However, he argued that there is also a strong business case for backing resolutions calling for a fair living wage. Retailers that pay their staff fairly will typically see improvements in their bottom line, he said, due to “increased staff engagement, better productivity, reduced workforce turnover and reduced training costs as a result of that”.  

ShareAction operates the Workforce Disclosure Initiative (WDI), which is made up of 68 institutions with US$10 trillion in AUM and aims to improve transparency and accountability on workforce issues. 

WDI’s most recent report on wage levels and pay gaps – in which 173 global companies took part – noted that companies are being more transparent about pay, although the majority are still not paying sufficient wages and the CEO-to-median-worker pay ratio continues to increase.  

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