British supermarket chain Sainsbury's will increase pay for its staff in outer London to the level already achieved by staff in the capital's inner areas after pressure from shareholders, a source close to the company said.
In January, Sainsbury's, one of the UK's biggest private sector employers, set new pay rates for directly employed workers that will see it hit Britain's real living wage for all staff with extra for those in inner London.
However, its planned rate of £10.50 (€12.6) for workers in outer London fell short of the real living wage for that region.
Sainsbury's chief executive Simon Roberts was expected to announce the change on Friday, the source said, speaking on condition of anonymity before the formal announcement.
The Bank of England is watching pay deals closely as it weighs up the risk that the recent jump in inflation to a 30-year high of 6.2% becomes embedded in the economy and turns into a long-term price growth problem.
Real Living Wage
Investment group ShareAction said last month it was leading an investor coalition that included Legal and General Investment Management, Fidelity International, HSBC Asset Management and Nest which was demanding Sainsbury's commit to paying the real living wage to all its workers by July 2023.
The real living wage is established by the Living Wage Foundation and independently calculated by the Resolution Foundation, a think tank.
The rates are currently £11.05 per hour in London and £9.90 per hour in the rest of the United Kingdom, higher than the government's mandated minimum wage rate of £8.91 an hour, which rose by 6.6% to £9.50 an hour on 1 April.
Earlier on Thursday, Britain's biggest supermarket Tesco said it would give a 5.8% pay rise to store and fulfilment centre workers and promised to review the settlement next year.
Tesco's new deal took the pay of hourly-paid workers to £10.10 an hour from £9.55 previously.
News by Reuters, edited by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.