Indicator 3.2

Issue: Labour standards within the company

Indicator: Remuneration of supermarket employees and conditions of employment

As one supermarket employee put it: "Wages are always at the heart of everyone's concerns". Pay and conditions of employment are why people go to work and what keep them there. This indicator seeks to ask 'How well does each retailer treat its staff?'

Issues influencing pay and conditions for UK supermarket workers are complex and varied. The growing retail sector has created thousands of low paid, often part-time jobs. Over two thirds of employees in food retailing are part-time, the majority are women, with a large number of students and temporary or agency workers included. For example, Sainsbury's increased its number of part-time employees from 45,000 in 1989 to 84,500 in 1998. Thus 69 per cent of all staff worked part-time and 75% were women.[3]

UK government legislation and European regulations have provided an improved framework of minimum labour standards for supermarket employees which include trade union recognition, the national minimum wage and regulations which prohibit discrimination against part-time workers. However, the proposed EU directive to provide temporary agency workers with equal pay and conditions after six weeks’ employment ran into trouble and was blocked by the UK government. In addition, the UK has until March 2005 to implement the EU directive establishing a general framework for informing and consulting employees.

But what are the realities? The national minimum wage has undoubtedly improved pay for those on the bottom tier of the pay structure. Despite this, retail cash desk and checkout operators (84% are women) fall in the bottom ten percent of non-manual occupations with average full-time earnings of £184.70[4] per week. In addition, the latest New Earnings Survey concluded that part time women earned just 58.6% of the hourly rate of full time male workers.

Many of the multiples have moved their lowest rates above the national minimum wage (NMW) of £4.20 (implemented in October 2002) to be more competitive. For example, Tesco’s pay review in July 2002 implemented an hourly rate of £5.16 for those over 18, Sainsbury’s pay an hourly rate of £4.81 and Safeway £4.61[5].

The jump in the NMW has also led some supermarket chains that employ a high proportion of young staff to review their youth and adult rates. It is common practice for the supermarkets to pay at least the NMW for staff at age 18 (the statutory age is 22) and the rates paid to staff aged 16 and 17 tend to be above the established rate of £3.60. For example, the Co-op sets a minimum rate of £4.28 for newly appointed staff aged 18 or over at national level[6], although the company allows some local variation in order to recruit and retain staff.

Other variables affecting pay rates include length of service. Many employees start on lower rates that are increased after an initial period of training. For example, Safeway checkout operators pay rates increase from £4.50 to £4.72 after a 3 month induction programme. Sainsbury’s 2002 rates rose from £4.21 to £4.47 after a similar period of time (up-to-date rates will be available from early August 2003)[7] Similarly, there are regional variations, with the highest rates in London. For example, pay bands and structure (at 1 July, 2001) for sales advisors in Marks and Spencer included three levels of London allowance paid on top of basic rates and Tesco brought in new zonal pay bands in August 2000.[8] Both the Co-op and Sainsbury’s also operate a number of higher pay zones to accommodate varying pay pressures in different parts of the country.

Staff employed by food manufacturers have seen parallel pay rises with the minimum rate set at £4.54 an hour (£176.90 a week) in 12 companies represented by the Food Manufacturers Group.[9] The New Earnings Survey identified average earnings for production operatives (the most common job in the industry) at £6.93 an hour in 2000.

Flexible working for staff is another important issue and recent surveys have been publicised which reveal that a third of employees seeking a new job would rather have the opportunity to work flexible hours than a large pay rise.

The Employment Act 2002 is the most far-reaching piece of employment legislation for many years and this includes new family-friendly employment rights that came into effect on 6 April this year. One of these new entitlements is the right of parents of children under 6 or of disabled children under 18 to request flexible working.

In fact, the majority of supermarket retail employees, for example mothers or students, already work flexible hours. However, the system is not without its problems and staff can find their hours altered arbitrarily by managers to cover busy periods or staff shortages. Similarly, some of these staff are employed on short-hours contracts to specifically cover extended opening hours which include Sundays. However, Sunday premium payments, which tended to be double-time, or a day off in lieu, prior to the 1994 Sunday Trading Act, are being reduced and phased out altogether by some supermarkets as Sunday is now generally accepted as part of the working week in the retail sector.[10]

Benefit packages make an important contribution to the job for those who qualify – many do not, for example in 1998, 40% of all employees did not earn enough to pay National Insurance contributions and were excluded from pensions and other contribution-based benefits.[11] A new TUC report called “Beating the gender poverty gap” (released 12 March, 03) reinforces this. To quote, “With many working women currently earning too little to pay into pension schemes, the TUC is concerned that another ...generation of poor female pensioners is being created. Recent figures from the Equal Opportunities Commission suggest that only four in ten (37%) of women who work part time have access to any kind of pension scheme, yet nearly half (44%) of all female employees are part timers.”

Bonus payments, company pension and share option schemes together with lifelong learning opportunities and other family-friendly policies are part of the decision to stay in a job. Marks and Spencer offers a number of profit-related bonus schemes, Save as You Earn schemes and a non profit-related bonus is paid to all non-managerial staff. Tesco offers a range of similar benefits to staff after one year’s service and take up is around 50% for those who qualify.


What can supermarkets do?

Clearly many women and students benefit from the family-friendly policies on offer to UK supermarket staff. Flexible hours is a good example of this. In addition, supermarkets have implemented pay rates that tend to offer at least the NMW to staff at 18, rather than at the statutory age for qualification of 22.

However, as is highlighted above, although the NMW has undoubtedly improved pay for those on the bottom tier of the pay structure, retail cash desk and checkout operators (84% are women) still fall in the bottom ten percent of non-manual occupations with average full-time earnings of less than £200 a week.

In addition, supermarkets need to address the issue of retail staff not qualifying for benefit packages. If a significant percentage of staff do not earn enough to pay NI contributions and are excluded from pensions and other contribution-based benefits, the long term financial security for these workers (the majority of whom are women) when they get to retirement age is bleak.


How this indicator is measured

Supermarkets employ people in a wide range of jobs and checkout operators (or the equivalent grade) have been chosen to represent hourly rates of pay because they are a large category of workers, they are very visible to the customer and tend to represent the lower ends of the supermarket pay scale.

As shown above, there are a range of rates paid to these employees depending on how long they have worked, their age and where they live. But it is possible to define minimum and maximum rates for experienced workers – defined as those who have worked for more than 12 months – that can be used as a yardstick.

Supermarkets will be asked to supply data on pay through the questionnaire. Additional data will be sought from the trade unions, including information on collective bargaining agreements on pay and conditions. Other information will be collected from a range of surveys and reports on earnings and employment, for example the Office for National Statistics, New Earnings Survey and the Labour Force Survey.

Similarly, information on turnover of checkout operators will be sought from supermarkets and trade unions. This will take into account those on temporary contracts and employment agency staff who have naturally come to the end of their contracts. Length of service, flexible working, benefit packages and other family-friendly policies will also be considered as other indicators or variables affecting or supplementing pay rates.


[3] Report to the Employment Select Committee 1998

[4] Source: New Earnings Survey, Labour Force Survey

[5] USDAW – NMW – written evidence to the Low Pay Commission (October 2002)

[6] Ditto

[7] Ditto

[8] IDS Report 838. Aug.2001

[9] IDS Report 836, July 2001

[10] IDS Report 852, March 2002

[11] McKnight, Alison, 1998; Social Insurance, low pay and long term disadvantage, in Claudio Lucifora and Wiemer Salverda; Policies for low wage employment and social exclusion, FrancoAngeli, Milan

Home | About | Issues | Results | Case studies | News | Contacts

Copyright ©2002 - 2003 IIED - all rights reserved

Site design and implementation by