Tesco, Britain's biggest retailer, said it would raise store workers' hourly pay by 9.1%, in a move that reflects the increase in the government-mandated minimum wage.
The supermarket group, one of the country's largest private sector employers , said a deal struck with shop workers' union USDAW means hourly base pay will rise from £11.02 ($13.98) to £12.02 from April.
That is ahead of the government's national living wage, which will increase by 9.8% to £11.44 an hour.
Tesco's London workers will get £13.15 an hour.
The group said the rise would cost it over £300 million (€351.3 million).
AJ Bell said in an analyst note that 'giving workers extra cash to help them deal with cost pressures creates goodwill but it also makes it harder for smaller businesses to compete.'
It added that 'with little sign that the hoped-for VAT cut might be on the cards' at the budget, there will be plenty in the hospitality and retail sectors 'feeling quite hard done by'.
Wage Settlements
The Bank of England is keeping a close eye on wage settlements as it assesses the direction of interest rates. It fears rapid wage growth could add more inflationary pressure across the economy.
Worker wages in Britain have only recently begun outpacing inflation, which held steady at 4% in January, still double the central bank's target of 2%.
Sainsbury's, Britain's second biggest supermarket group, announced a 9% pay rise for its workers in January, with an hourly rate of £12 from March.
The No. 3 player, Asda, last week announced an 8.4% hike. However, its increase to £12.04 an hour will not take effect until July.
Other retailers, including Marks & Spencer, Amazon, Aldi, Lidl and Costa Coffee have also announced pay rises for 2024.
News by Reuters, additional reporting by ESM.
