Ikea adopts the living wage for UK staff in 'massive breakthrough'

Rupert Jones - The Guardian


Swedish furniture chain provides major boost for Living Wage Foundation saying rise in pay makes good business sense


Ikea plans to introduce the living wage from April 2016 for all its UK staff.
Ikea plans to introduce the living wage from April 2016 for all its UK staff. Photograph: Alamy

Campaigners challenging big businesses over low pay have received a major boost after Ikea became the first large national retailer to commit to paying its UK staff the living wage.


The announcement that the home furnishing retailer will pay its staff a minimum of £9.15 an hour in London and £7.85 across the rest of the UK from April next year was described as a “massive breakthrough” by the living wage campaign. It will mean a pay rise for more than 4,500 staff.

Rhys Moore, director of the Living Wage Foundation, told the Guardian: “The experience of the campaign throughout has been that you need a first mover in every sector. This opens up some fruitful conversations with others who have said this is impossible in retail and it can’t be done. It can.”


The foundation has accredited more than 1,600 businesses, including nearly a quarter of the FTSE 100 and well-known companies such as Nestle, Nationwide and British Gas – but until now, the only household name retailer that had signed up was Burberry.


Campaigners will continue to press the biggest chains, such as Tesco, Sainsbury’s and Next, to pay the voluntary rate, which is calculated according to the cost of living.


Ikea’s move comes less than a fortnight after George Osborne used his post-election budget to announce that the £6.50-an-hour minimum wage would be recast as the “national living wage” and rise next April to £7.20 for people aged over 25, with further increases to “over £9” by 2020.


Moore said a strong national minimum wage was a great boost, “but the issue remains that for many UK employees, despite working hard, their rates of pay simply don’t cover the costs of living. The living wage remains key to tackling in-work poverty in the UK”.


Last month, Tesco boss Dave Lewis told campaigners that the retailer was in detailed talks with the trade union Usdaw about restructuring pay packages to increase basic salary. But he insisted the total amount available for workers could not be increased this year. In May, Ocado said that the vast majority of its staff were already earning above the minimum wage, once benefits such as bonuses were taken into account.


Ikea has also been boosting the pay of its US workers: last month the Swedish chain announced that in January 2016 it will raise the minimum hourly wage by 10% to $11.87, following a previous increase to the current level of $10.76.


The London living wage – currently £9.15 an hour – is set annually by the Greater London Authority. The rate for outside London – currently £7.85 an hour – is set annually by the Centre for Research in Social Policy at Loughborough University.


In November, the foundation will launch a new consumer campaign, and will unveil an app allowing people looking for a particular product to find a retailer, business or cafe that pays its staff the living wage.


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