Morrisons follows Lidl and gives pay rise

The supermarket plans to increase the basic pay rate from £6.83 an hour to £8.20 an hour, well above the National Living Wage set at £7.20 an hour from April 2016.

The 20% pay increase will benefit about 90,000 workers but it remains unclear whether the boost in morale will make a front-end difference, according to analysts at Shore Capital.

“What is impossible to assess is the impact upon store performance, front-end and in terms of productivity, from a more motivated workforce in a largely people centric organisation,” Clive Black and Darren Shirley said.

‘Absolutely cock-a-hoop’

“We would imagine that the majority of Morrisons colleagues will be absolutely cock-a-hoop about the stepped upward adjustment in pay.” 

Two weeks ago, discount supermarket Lidl led the way by announcing that it would pay workers at least £8.20 an hour in the UK.

Morrisons ceo David Potts has identified the labour pool as a “key turnaround asset” as he tries to revive the supermarket’s flagging fortunes, Black and Shirley said.

“He recognised that Morrisons had to re-engage with all of its stakeholders; so suppliers, employees, customers and shareholders,” they said.

‘Shareholders tend to benefit’

“Whilst a bit of an old adage, we sense that management is following the simple but still effective principle that if the first three are well looked after and satisfied then the latter, that is shareholders, tend to benefit too.”

Morrisons said it also planned to simplify supplements, such as a premium for working on Sundays.

Potts said: “We have been listening to our colleagues who told us they want their pay to be more competitive and simpler.

“By paying a significantly higher hourly rate, we are recognising the contribution of our excellent staff, who are so important to the revival of Morrisons.”

Meanwhile, Sainsbury has announced that full-year underlying profit before tax was set to be better than expected.

Sainsbury chief executive Mike Coupe said: “Year-to-date we have traded well, with both sales and cost savings ahead of expectations.”

“Should current market trends continue, we expect our full-year underlying profit before tax to be moderately ahead of our published consensus [£548M].”