Lidl lifts pay ahead of minimum wage rise

Ahead of the minimum wage increase in April, German discount supermarket chain Lidl has announced a pay raise for thousands of its employees, becoming the latest supermarket to take such action. This move underscores the competitive landscape in the retail sector as companies strive to attract and retain talent.

Lidl stated that the pay increase will affect approximately 28,000 employees, including raising its entry-level hourly wage from £12.40 to £12.75. This adjustment will place Lidl's wage levels higher than previously announced planned increases by Sainsbury's and Aldi. The company aims to remain competitive in the labor market by offering attractive compensation packages.

Many retailers have warned that the increase in the minimum wage standard in April, along with the increase in employer National Insurance contributions (NICs), will lead to job losses, price increases, and store closures. From April, the statutory National Living Wage for those aged 21 and over will increase from £11.44 to £12.21 per hour. These rising costs are placing significant pressure on businesses across the retail industry.

Lidl employs over 35,000 people in the UK, with more than 970 stores and 14 warehouses. The company stated that the new hourly wage could rise to a maximum of £13.65, depending on length of service. In London, the hourly wage for new employees will rise to £14.00 and could increase to £14.35 over time. Previously, Aldi announced that it would pay all store assistants a minimum hourly wage of £12.71 nationwide, with even higher wages in the London area. This shows a trend of increasing wages to attract and retain employees.

Last month, Sainsbury's stated that its wages would increase from £12 to £12.45 per hour in March, followed by a further increase to £12.60, with higher wages for employees in the London area. However, Sainsbury's also announced that it would cut 3,000 jobs by closing its remaining cafes and shutting its pastry and pizza counters. While Sainsbury's has already developed plans to save £1 billion in the coming years, it is understood that the increase in employer National Insurance contributions announced in the budget is also a factor in the restructuring plan. This highlights the complex financial pressures retailers face.

The government has defended the tax increase, stating that it is a necessary measure to avoid cuts to public services, and the Treasury Department stated that exemptions for small businesses mean that more than half of employers will see a reduction or no change in their National Insurance bills. But many retailers have criticized the move, with M&S boss Stuart Machin saying that retailers are being "raided like a piggy bank" given the changes to various taxes. The retail sector is grappling with the impact of these policy changes.

Meanwhile, a KPMG and Recruitment & Employment Confederation (REC) survey of the job market showed that companies are delaying hiring new employees due to economic performance uncertainty, causing companies to adopt a "wait-and-see" attitude. The survey found that the number of vacancies for permanent staff fell sharply, with a significant decline in January. "The autumn fiscal gloom, struggling to cope with significant upcoming tax increases, and little progress on a costly new approach to employment rights are all holding back progress," said REC Chief Executive Neil Carberry. This suggests a broader slowdown in hiring across various sectors.