Ikea UK is to introduce the living wage from April 2016.
The retailer has committed to paying all staff at least £7.85 an hour, and a minimum of £9.15 an hour in London.
The pay increase is expected to impact 50% of Ikea UK’s 9,000 employees.
Ikea’s living wage pledge is part of a wider initiative to ensure that staff receive the right level of pay, as well as a schedule and contract that works for them, the organisation and customers.
Gillian Drakeford, Ikea UK and Ireland country manager, said: “As a values-driven organisation, we are guided by our vision to create a better everyday life for many people, which, of course, includes our co-workers.
”We believe our people are the inner strength of our [organisation], so it is only right to ensure we provide a meaningful wage that supports the cost of living.
“Introducing the living wage is not only the right thing to do for our co-workers, but it also makes good business sense. This is a long-term investment in our people based on our values and our belief that a team with good compensation and working conditions is in a position to provide a great experience to our customers.”
Rhys Moore, director of The Living Wage Foundation, added: “This is a historic moment in the life of the living wage movement, as Ikea becomes the first national retailer to announce its commitment to the living wage and it will reward all its staff with an hourly rate of pay that covers the cost of living.
“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.”
The living wage is the rate of pay calculated by the Living Wage Foundation to cover the basic cost of living in the UK. It is distinct from the national living wage of £7.20 an hour announced by Chancellor George Osborne in the 2015 Summer Budget. The national living wage, which applies to workers aged 25 and over, will come into effect in April 2016.
Earlier this year, Ikea US revealed plans to increase the average minimum hourly wage paid to staff to $11.87, effective from January 2016. This is $4.62 higher than the US national minimum wage of $7.25 an hour.
IKEA’s commitment to pay all employees the living wage is a significant step for the retail industry so soon after the Chancellor’s Budget, and sets a benchmark for retailers seeking to be socially responsible.
The IKEA brand is already synonymous with making design-led homes and furniture affordable; this commitment as an employer reinforces the retailer’s credentials as an ethical employer.
With some commentators questioning the affordability of the living wage for employers, IKEA’s move will no doubt be scrutinised carefully by other retailers.
Far from being punitive, this first mover advantage is much more likely to pay dividends for the IKEA brand, supporting staff recruitment, retention and building good will.