Sainsbury's pressed to pay more to subcontracted workers

Pressure is mounting on Sainsbury's to ensure all its workers are paid the real living wage.

Sainsbury's already pays its direct employees more than the rate set by the Living Wage Foundation, which is higher than the government-set minimum wage.

But some investors are calling for it to sign up to the Living Wage Foundation's pay commitments.

If it does, the higher pay rate would be extended to subcontracted staff, such as cleaners.

If Sainsbury's becomes formally accredited with the Living Wage Foundation, it would mean the grocery chain was committed in future years to raising pay in line with the foundation's rates.

The legal minimum wage for workers over the age of 23 set by the government, and officially known as the National Living Wage, is £9.50 an hour.

The real living wage is £9.90 an hour. The rate is set by the Living Wage Foundation based on what it calculates people need to live on and is recalculated every autumn.

ShareAction, the group behind the campaign for a new pay policy at the supermarket, said there was a "compelling moral case" for offering all staff, including subcontracted workers, the higher rate. There was also a "clear business case for employers", ShareAction said, at a time when firms are competing to hire and retain staff.

Shareholders will vote on the resolution at Sainsbury's annual general meeting, taking place on 7 July.

Investors already backing the resolution, including Legal & General Investment Management and the National Employment Savings Trust (Nest), have been joined by the Coal Pensions Board and wealth management firm Coutts and Co.

Leslie Gent, head of responsible investing at Coutts, said while Sainsbury's had made "positive progress" by matching real living wage rates for its directly employed staff, shifting to full accreditation with the Living Wage Foundation would help "set a standard for all UK supermarkets".

In March, Sainsbury's raised its basic pay rate to £10 an hour for staff across its supermarkets and Argos stores, with higher rates in London.

That puts it among the higher paying firms in the sector. Budget supermarkets Aldi and Lidl pay more per hour, and Morrisons also pays £10 an hour. Tesco has said it will pay £10.10 per hour from the end of July.

A spokesperson for Sainsbury's said the "vast majority" of its subcontracted staff were already being paid at the real living wage level, but the difficulty came with making a longer-term commitment to pay the rates set by the foundation.

"We fundamentally believe that to effectively balance the needs of our customers, colleagues, suppliers and shareholders we must preserve the right to make independent business decisions which are not determined by a separate body," she said.

"As we balance the needs of all our stakeholders, particularly in the light of the current cost of living challenges that many people in the UK face, it is vital that we not only pay our colleagues fairly but that we are able to invest significantly to offer customers great value."

Other large shareholders in the company have said they will support the firm and vote against the resolution.

Kimberley Lewis at Schroders said Sainsbury's was already meeting its expectations around paying a fair living wage and other employee benefits. The asset management firm, one of Sainsbury's largest investors, is itself accredited with the Living Wage Foundation.

But Ms Lewis said Schroders believed it would be damaging to the supermarket's prospects to pass the resolution.

"We strongly believe, in this environment particularly, this could inhibit Sainsbury's ability to remain competitive; for example, making it harder to keep prices of essentials low," Ms Lewis wrote in a blog.