Real Living Wage Row: why are M&S and other big retailers under fire?

Marks & Spencer and Sainsbury’s are among the large employers that have come under fire from shareholders for failing to pay all staff the real Living Wage (RLW).

Investment group ShareAction will attend both brands’ annual general meetings (AGMs) this week, to campaign for contracted staff at both organisations to be paid a liveable wage. Other retailers, including JD Sports, Next, and Tesco have also been criticised.

Many large high street retail brands, including the two grocery chains being targeted by ShareAction this week, have raised pay for supermarket jobs and retail workers.

Yet, despite many of these businesses reporting record profits this year, ShareAction says the same privilege has not been extended to third-party team members.

What is the real Living Wage and why does it matter?

There is a lot of confusion around the RLW and the National Living Wage. Every employer is required by law to pay the latter to all workers aged over 21. However, the real Living Wage is a voluntary rate that over 14,000 firms have opted to pay.

Set by the Living Wage Foundation, the real Living Wage is an hourly wage rate that is calculated in line with inflation. It is currently £12 an hour nationally (£13.15 in London). This is slightly higher than the National Living Wage which rose to £11.44 an hour in April.

Marks & Spencer and Sainsbury’s currently pay their direct employees the national real Living Wage. Both raised their rates to £12 an hour this year in a battle to win the best talent (Sainsbury’s also pays the London real Living Wage).

However, ShareAction is now calling for major high street retailers and supermarkets to commit to paying all staff – such as third-party cleaners and agency security teams – the higher wage on an ongoing basis.

On Monday, it posted on X (formerly Twitter) that it will be attending the AGMs of Marks & Spencer and Sainsbury’s, as well as JD Sports, to question directors on “their refusal to pay all staff a real Living Wage of £12 an hour”.

Retailers are not directly responsible for the wages of third-party staff. However, they may include clauses in their contracts requiring companies to pay workers the RLW in order to hold the contractor accountable.

Image Credit: x.com/@ShareAction

Security teams face heightened threat

Pay rises are especially in order for third-party security teams in supermarkets. Shops have become an increasingly hostile workplace for guards thanks to a rise in shoplifting. Crimes range from petty thefts, to physical assaults on staff members.

Back in February, the Co-operative Group recorded a 48% rise in burglaries and assaults on staff. According to the supermarket, there had been 298,000 incidents in just one year.

Tragically, a security guard at an Asda store in Arbroath, Scotland recently died after suffering a cardiac arrest while trying to prevent a 37-year-old woman from stealing alcohol.

In response to the surge in store thefts, retailers have begun rolling out new security systems to stamp down on criminal behaviour.

Why might brands be struggling to pay the real Living Wage?

This is not the first time that organisations have come under fire for failing to pay certain workers the real Living Wage. Brewdog faced similar criticism last year, when it rescinded its status as a RLW employer following what it described as an ‘unviable’ minimum wage rise.

Retail and hospitality businesses typically operate on very low profit margins, which is why the wage rise has triggered a staffing pay crisis for many. The fallout has caused thousands of independent bars, restaurants, and pubs to close.

This is unlikely to be the case for Sainsbury’s and M&S, however. Both firms have reported huge profits in the past six months. Notably, M&S recorded an adjusted EBITDA of £26.8mm after its revenue increased to £2.47bn in the last financial year.

And while minimum wage earners will miss out on a payday jackpot, the duo have each invested in higher CEO salaries for top-line workers.

M&S CEO Stuart Machin earned a cool £4.7m this year. Sainsbury’s has not published up-to-date remuneration figures for its CEO Simon Roberts, but he did take home £4.95m in 2023.

The ShareAction campaign highlights the dangers of prioritising management bonuses and shareholder dividends over staff wages – whether permanent or contracted.

A return to profitability for large high street brands is to be celebrated, especially when so many have gone into administration since COVID. However, it must not come at the expense of worker living standards.