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John Lewis is handing shop floor staff an above inflation 6.9 per cent pay rise this year, as the mutually owned retailer aims to placate partners who have gone four years without an annual bonus.
The owner of John Lewis department stores and Waitrose supermarkets announced on Wednesday that it would set aside £108mn to fund pay increases for the majority of its 69,000 partners. For shop floor workers the pay rise equates to an average increase of £1,600 a year.
It comes after partners last year demanded the reinstatement of an annual bonus that had come to be seen as a barometer of John Lewis’s financial health.
The partnership, chaired by former Tesco executive Jason Tarry, said that the pay rise was separate from a potential reinstatement of the bonus, which would be decided by its board in March. At its peak, during the 1980s boom years, the annual bonus was as much as 24 per cent of salary.
The partnership, which runs 36 department stores and more than 300 food stores, has long offered staff generous perks, such as discounted rates at company-owned country hotels.
But in recent years it has been forced to water down benefits, including the closure of its generous final salary pension scheme, as profits tumbled in the face of stiff competition from Marks and Spencer to Amazon and Aldi. John Lewis is scheduled to report annual results in March.
The wage increase is above the prevailing rate of inflation, which hit 3.4 per cent in December. Once the rise comes into effect, John Lewis partners will earn minimum hourly rates of £13.25, with higher rates for staff with longer tenure or living in and around London.
Retailers have pushed through several years of above-inflation pay rises to keep their rates higher than the national living wage.
Sainsbury’s said last month it would raise pay rates by 5 per cent for hourly-paid staff to £13.23. Aldi and Lidl, the discount supermarkets, are raising pay for entry-level staff around the UK to hourly rates of £13.35 and £13.45 respectively.
Other large retailers, including Tesco and Asda, are in negotiations with trade unions over pay for hourly-paid employees.
While its annual bonus has been frozen, the partnership has continued to increase hourly pay rates.
“This £108mn investment is about putting more money into their pockets month-in, month-out,” said Helen Webb, chief people officer at John Lewis.
“This pay growth demonstrates a sustained commitment to partner pay, consistent with previous years,” she added.
