Ikea brings in minimum wage

Retail groups have questioned moves towards a minimum wage hike.

Swedish furniture chain Ikea will become the first national retailer in the UK to pay its staff above the new National Living Wage from 2016.

Ikea said it would pay all its 9,000 UK workers at least £7.85 an hour from April 2016.

The rate for employees in London will be £9.15 an hour.

Chancellor George Osborne announced a new compulsory living wage of £7.20 an hour in the Budget earlier in July, which will increase wages for about six million people.

He said that employers must pay at least that much to workers aged 25 and over from April 2016, with the rate rising to more than £9 an hour by 2020.

The existing minimum wage for those over 21 is £6.50 an hour.

Ikea said it would instead pay all its UK workers - including those under 25 - the rate set annually by the Living Wage Foundation.

The CBI and Association of Convenience Stores have attacked Osborne's move.

British Retail Consortium director general Helen Dickinson said: "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 per cent 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."

About half of garden centre staff and more than that in the nursery sector are believed to be on minimum wage.

HTA chief executive Carol Paris said: "As a people based service industry the impact of an increase in the minimum wage presents a huge challenge for horticultural industry.

"‘Whilst we cannot change the travel of direction we are looking at what mitigating factors will help us to deliver this and achieve efficiencies to counter the additional costs which will be incurred. As members of the British Retail Consortium (BRC) the HTA are taking part in wider discussions with retail players for whom the impact of these increases are also considerable."

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