Ikea pledges to pay more than Osborne's living wage for all UK staff

• Ikea to pay living wage rates outstripping those set by Chancellor George Osborne
• Retailer to pay £9.15 an hour to workers in London and £7.85 outside from next April
• Campaigners have hailed the move as “momentous” and “historic”

The retailer said it will pay workers a minimum of £7.85 per hour and £9.15 per hour to those working in London – rates that easily outstrip the compulsory living wage set by Chancellor George Osborne in this month’s Budget.

Osborne introduced a living wage of £7.20 from next April for workers aged 25 and over, rising to £9 an hour by 2020.

But Ikea’s rates bring the retailer’s pay into line with more widely accepted living wage targets. The London living wage, which stands at £9.15 an hour, is set annually by the Greater London Authority. The rate outside London, £7.85 an hour, is set by the Centre for Research in Social Policy at Loughborough University.

Ikea said its new rates, which have been dubbed “momentous” and “historic” by campaigners, will come into force from April 1, 2016. The move will give pay hikes to more than half of its 9,000-strong workforce.

Right thing to do  

Ikea UK and Ireland country manager Gillian Drakeford said introducing the higher rates of pay was “the right thing to do”. It comes after Iceland boss Malcolm Walker backed the living wage and pledged to move towards the new rates set by Osborne as soon as possible, in a letter sent to staff.

Drakeford said: “As a values-driven organisation, we are guided by our vision to create a better everyday life for the many people which, of course, includes our co-workers. We believe our people are the inner strength of our company, so it is only right to ensure we provide a meaningful wage that supports the cost of living.

“Introducing the living wage is not only the right thing to do for our co-workers, but it also makes good business sense. This is a long-term investment in our people based on our values and our belief that a team with good compensation and working conditions is in a position to provide a great experience to our customers.”

‘Momentous announcement’

Rhys Moore, director of the Living Wage Foundation, said: “We are delighted with this momentous announcement that Ikea will be accrediting as a living wage employer.

“This is a historic moment in the life of the living wage movement, as Ikea become the first national retailer to announce their commitment to the living wage and they will reward all their staff with an hourly rate of pay that covers the cost of living.

“This is a huge step for the British retail sector and we hope that many other businesses will follow the leadership Ikea is showing on the issue of basic pay.”

British Retail Consortium director-general Helen Dickinson added: “Following the Chancellor’s Budget announcement every retailer has a timeline led by the Low Pay Commission to deliver higher rates of pay. For all retailers their workforce is a crucial part of how the deliver to customers each and every day and they take the way that people work and how they are rewarded very seriously.

“This is demonstrated by the collegiate relationships many have with trade unions and the fact that 95% of retail staff are already paid above the minimum wage, despite one in every three being under 25.

“Every company’s approach to working conditions and their pay and reward structures is unique and is based on consulting with staff on which rewards are mostly highly valued. Many people enter retail and progress quickly and we are working with our members to find solutions to help those people who get stuck on low pay to also progress up the retail career ladder.

“From an industry wide perspective, this will be the route to addressing the broader challenges of UK productivity being below that of other countries and the increasing numbers of people on low pay.”