July 21, 2015

Ikea to pay UK staff living wage

The Swedish retail firm Ikea has announced it will pay all its UK staff in line with the country's "living wage" rate from 2016.

The UK living wage, as determined by the Living Wage Foundation, is currently £7.85 an hour, or £9.15 in London. The Foundation calculates that this is the minimum rate required to ensure a decent standard of living.

Several high-profile UK businesses have already committed to paying staff the living wage, but Ikea will be the first employer in the retail sector to do so. The company estimates that around half of its 9,000 UK-based employees will receive a pay increase as a result of the decision.

Rhys Moore, director of the Living Wage Foundation, told BBC News: “This is a huge step for the British retail sector and we hope that many other businesses will follow the leadership Ikea is showing on the issue of basic pay.”

Earlier in July, the British government announced legislation that will enforce what it describes as a “national living wage” from 2016. However, the statutory rate is less than the amount set by the Living Wage Foundation, will apply only to workers aged over 25, and will not be higher in London where living costs are more expensive.

Armin Falk has written for IZA World of Labor about the effect that fairness regards pay and conditions have on employee motivation. He writes that: “Firms that emphasize the fair treatment of workers with regard to wages and other workplace conditions may produce better outcomes for both themselves and their workers.”

Read more on this story at BBC News and the Guardian.

Related article:
Fairness and motivation by Armin Falk

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