Photographer: Chris Ratcliffe/Bloomberg

Tesco Hands Store Staff a Pay Raise as U.K. Minimum Wage Bites

  • 250,000 workers will see pay rise by 10.5% over next 2 years
  • U.K. minimum wage set to steadily increase until 2020

Tesco Plc said it’s boosting pay for U.K. store staff as Britain’s largest private-sector employer prepares for imminent increases in the country’s minimum wage.

About 250,000 workers will get a 10.5 percent increase over the next 18 months, taking their hourly wage to 8.42 pounds ($10.70) by November 2018, the U.K.’s biggest retailer said in a statement Friday. Tesco’s starting rate for shop-floor workers is currently just 12 pence above the minimum wage.

“This reward package sees our biggest investment in store pay for a decade, and gives colleagues a sustainable pay deal,” Tesco’s U.K. head Matt Davies said in the statement.

Tougher pay requirements are among a series of cost pressures facing the U.K.’s store-based retailers, who employ large numbers of staff on low wages. Sterling’s depreciation since last year’s Brexit vote is pushing up sourcing costs, while taxes on stores remain high.

Adjusting for such a climate, Tesco this week announced the closure of a call center in Cardiff, Wales that it expects to cost 1,100 workers their jobs. Minimum wage increases and technological changes may result in as many as 900,000 job losses in the industry over the next decade, according to industry group the British Retail Consortium.

Tesco workers, who are currently paid 7.62 pounds an hour, will get a 40 pence increase this November. In July 2018, wages will rise again to 8.18 pounds, before being increased for a third time to 8.42 pounds an hour in November of that year. The increase applies to store staff of all ages.

Tesco also raised pay for shop-floor workers by 3.1 percent in February last year.

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