Why the £10 an hour pledge by Morrisons isn’t as good as it seems

So a hearty three cheers to Morrisons after the supermarket group announced plans to award its shop floor staff a thumping pay rise?

The company’s minimum hourly pay, currently £9.20, will from April be bumped up to £10 for those workers who have passed probation periods. There is also an inner London weighting of 85p an hour and an outer London bump of 60p extra.

The group said that “a majority” of its 96,000 employees would enjoy a rise of roughly 9 per cent through the deal. 

The move was widely welcomed, including in some unusual places. A Shore Capital analyst’s note, for example, applauded the move saying: “Supermarket workers across the UK have been real heroes of this pandemic to us.”

Indeed so. It’s just a great pity that the note went on to whine about how “other stakeholders in society may like to reflect upon” the move, wagging its finger at teachers’ unions . While it exempted “the vast majority of teachers” from the jab it was still an extraordinarily mean-mixed comment given said unions are only trying to protect the lives of their members who are exposed to risks that the City of London’s well heeled employees aren’t.

But it’s Morrisons we’re discussing here.

The group’s CEO David Potts paid tribute to his workforce saying: “Morrisons colleagues have earnt their status as key workers, and this pay increase, many times over.”

And they have. But he could have done better still. A quarter of the award will, for example, be funded through an “adjustment” to the discretionary annual bonus scheme. Morrisons said its staff had said they would “prefer to have a guaranteed amount in their hourly rate and receive it more regularly” and I take note of the fact that shop workers union Usdaw endorsed this in the group’s press release. So that’s fine. 

But it means part of the award isn’t new money. It’s a structural tweak rather than a full on rise, a tactic supermarkets have often used when announcing superficially eye-catching pay promises.

Some 75 per cent is still being paid through “a direct payroll investment” at a cost of £8m a year. This is something the company can well afford given the Covid-driven sales boom it has enjoyed.

The end of the pandemic may knock some of the gloss off that as people return to offices and start eating out more. But not all of it. An increased level of home working is here to stay so the good times for Morrisons shareholders should continue to roll. 

The supermarket group has also yet to become an accredited living wage employer. With this rise it has come oh so close. Only outer London employees will be underwater (the voluntary scheme’s higher London rate is £10.85, which applies to the whole capital).

But that means there’s no cigar with the cheers for Mr Potts, who, were the company accredited, would also have to make a commitment to increase pay in line with the rates set by the scheme. They are calculated based on what is required to fund a decent basic standard of living.

Not a single supermarket has yet signed up, and given the risks their workers have been taking to keep the nation fed it’s the very least they could do. 

It’s worth noting that Ikea is on board, thus proving that it is possible for retailers to take the step.

News that the majority of Morrisons staff will be paid above the living wage rate(s) came on the same day that Citizens UK, the community organising group, published research that found 45 per cent of supermarket workers (410,000 employees) earn below the real living wage. Given that, the move is particularly welcome.

It might not just be because of the rise itself. Luke Hildyard, director of the High Pay Centre, pointed out that Morrisons has now raised the bar and set a challenge for its rivals. Perhaps one of them will feel moved to beat it.

If they were also to become the first accredited living wage supermarket through doing that, they would merit those full throated cheers.

I’d still have to add “and not before time”. But quietly.