Asda under pressure after pay rise lags behind Tesco and Sainsbury’s

Asda is under pressure to raise pay for its shop floor workers after wage increases at Tesco and Sainsbury’s this week left the Leeds-based chain as the UK’s lowest paying supermarket.

Asda, the UK’s third largest supermarket chain, pays workers a minimum of £9.66 an hour, or £10.83 in London, making it the only big chain to pay less than the independently verified living wage of £11.05 in the capital and £9.90 elsewhere.

More than half of Asda’s shop floor workers have had to borrow cash from friends and relatives in the past year; 8% have used a food bank and 12% have used a payday lender, according to a survey of 2,000 of the supermarket’s workers by the GMB union.

Nadine Houghton, the union’s national officer, said: “Asda needs to get a grip. It is now the lowest paying of the big four supermarkets and one of the lowest paying supermarkets overall. There is a cost-of-living crisis and for many Asda workers, covering basic bills is a struggle.”

Asda said it had increased its pay to £9.66 an hour this month, just above the new £9.50 legal minimum for those aged 23 and over, and was one of only two supermarkets that continued to pay store staff a bonus.

The one-off bonus, of £413 for full-time workers, in effect lifted hourly pay to £9.88, Asda said. Workers are also in line for a pay rise in a year to an hourly rate of £10.06.

A spokesperson said: “We pay our store colleagues a competitive hourly rate benchmarked against the retail sector and our pay rate will increase by 7.35% over the next two years. Unlike most competitors, we also pay all store colleagues a bonus.”

Asda has been left behind as retailers have been forced to push through significant pay increases to counter high inflation and competition for suitable staff.

Industry insiders said there was a battle to hold on to experienced staff, as well as to attract new workers, given the expense of recruitment and training.

A combination of Brexit and the pandemic has increased competition for workers, as many Europeans went home in the past two years and either cannot, or do not, wish to return to the UK.

The pressure on Asda increased after Sainsbury’s confirmed it was raising pay for workers in its supermarkets and Argos stores in outer London by 55p an hour to the London living wage of £11.05.

The improvement makes it the first supermarket group to pay all its workers above the independently verified living wage after pressure from investors. Sainsbury’s staff in inner London already receive £11.05 an hour after a pay rise last month, while those outside the capital receive at least £10 an hour.

That pay rise came after Tesco, previously the UK’s lowest-paying supermarket, announced on Thursday that it was investing £200m to increase its rate of pay by 5.8% to a minimum £10.10 from 24 July 2022, the biggest single-year investment in hourly pay for shop and warehouse workers at the UK’s largest supermarket chain in at least a decade.

Under the deal agreed with the Usdaw union, some shopping delivery drivers, currently paid £9.55 an hour, will receive an extra 90p an hour from 1 May, with their hourly rate reaching £11 from 24 July 2022.

The latest pay rise at Tesco comes only seven months after it increased wages for its lowest-paid workers by 2.7% to £9.55 an hour. Tesco has now leapfrogged Aldi to join Sainsbury’s, Morrisons, Aldi and Lidl in offering at least £10 an hour.