Behavior Change
IKEA to Raise UK Employee Pay Above National Living Wage By 2016

IKEA will be the first national retailer in the United Kingdom to pay workers above the government's new National Living Wage, BBC News reports.

The Swedish furniture company said it would pay all of its 9,000 UK workers at least £7.85 (US $12.22) per hour hour starting in April 2016. Employees in London will be paid £9.15 ($14.40) an hour, reflecting the higher cost of living. The wage increase will affect around half of the company’s UK employees.

Earlier this month, UK Chancellor George Osborne announced a new mandatory living wage of £7.20 an hour to workers age 25 and over beginning in April 2016, with the rate rising to more than £9 (US $14) an hour by 2020.

The current minimum wage for those over 21 is £6.50 (US $10) an hour, BBC reports.

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But IKEA is going above and beyond the government mandate, paying all of its UK workers, including those under 25, the rate set annually by the Living Wage Foundation — making it the first national retailer to do so.

In June 2014, IKEA announced it would raise its average minimum wage in its US stores to $10.76 — a 17 percent increase — and $3.51 above the federal minimum wage.

The furniture company said the increase would impact approximately half of its US retail workers. Departing from determining wages based on the local competitive situation, IKEA said hourly wages would vary based on the cost of living in each store location. The wage increase was based on the MIT Living Wage Calculator, which takes into consideration housing, food, medical and transportation costs plus annual taxes.

In a letter published in the Financial Times in November 2013, a group of UK investors stressed the importance of living wages for employees, saying they wished to invest in companies that focus on the longevity and productivity of their business operations. The investors asserted there is “considerable evidence that paying the living wage helps to achieve these objectives.”

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