Lidl To Become First UK Supermarket To Implement Living Wage

Lidl To Become First UK Supermarket To Implement Living Wage

Starting in October, supermarket chain Lidl will be implementing, and even surpassing, the Living Wage Foundation’s recommended minimum wage. The German Supermarket will soon be paying their employees a minimum of £8.20 per hour throughout England, Scotland and Wales, with London employees earning a minimum of £9.35 per hour.

This represents a large increase from Lidl’s current minimum pay of £7.30 per hour and £8.03 per hour for those in the London area and is actually higher than the Living Wage Foundation’s recommended £7.85 per hour and £9.15 inside of London.

Intended as a suggested guideline for a bottom-line rather than an enforceable minimum wage, the Living Wage Foundation bases its recommendation on the rate of pay which would allow workers a basic standard of living.

According to Lidl, the new rate of pay equates to an average increase of £1200 a year for employees which makes an enormous difference for those at the bottom end of the pay scale.

“Lidl employees will be amongst the best paid in the supermarket sector,” told Lidl UK chief executive Ronny Gottschlich. Speaking with the BBC the director of the Living Wage Foundation, Rhys Moore, said that the foundation is “thrilled” with Lidl’s decision. “We’ve been working with and trying to persuade the retail sector to commit to pay the living wage rates rather than National Minimum Wage (now called the National Living Wage),” explained Mr Moore.

The government enforced National Living Wage announced in George Osborne’s July Budget is set to increase to £7.20 per hour from April 2016 for those aged 25 or over and falls below the recommended minimum wage set out by the Living Wage Foundation. Lidl’s decision to pay well above this minimum has garnered the supermarket chain a lot of support with many heading to Twitter to tweet about the good news already.

Aldi also offers a competitive rate of £8.15 per hour, while many other supermarkets have defended their much lower employee pay by claiming that benefits such as paid breaks, pensions, share schemes and employee discounts make up for the difference.

Sainsbury’s, which pays a minimum of just £7.36 per hour to its employees, stated that it also paid out around £50 million in bonuses last year. However, the hugely successful supermarket chain didn’t appear to state which level of employees benefited from these bonuses – one would be forgiven for doubting it was the lowest earners.

The Living Wage Foundation is set to announce a change to its recommendation in November and Lidl has also stated that if its current decision falls below the soon to be revised minimum, then they will alter the pay accordingly, despite this not being a legal requirement.

It’s easy to presume that more pay for those at the bottom of the pay scale will mean more spending across the UK and therefore more profit for businesses. Should others follow in the footsteps of Lidl, then we could see company policies succeeding where governments have failed – increasing spending and boosting the economy. Not to mention the boosted morale a higher earning workforce would have.

If Lidl’s decision does catch on and others go forward with the same approach, then we could see more and more businesses pressured into giving the same basic pay to their employees or risk losing their staff to better pastures.

However, this could potentially cut down on those in employment requiring additional help through benefits and therefore, in theory, reduce taxes paid by businesses. With any luck, the whole thing would result in little overall change for the businesses by everything balancing out, but a huge change in the lives of the employees.