Sainsbury’s raises pay but is cautious on hiring

Sainsbury’s has said it will raise hourly pay though it is cautious about recruiting new staff this year due to rising costs.

The supermarket chain said wages would rise 5% to £12.60 but it will be introduced in two phases “to help manage a particularly tough cost inflation environment”.

Sainsbury’s expects costs to jump due to an increase in National Insurance payments by employers outlined in the autumn Budget.

Looking ahead, chief executive Simon Roberts said: “We’ll have to look very carefully at all hiring decisions.”

Sainsbury’s outlined the pay rise as it revealed trading figures for the key Christmas period. Comparable sales rose by 2.8%, lifted in particular by food, although sales at Argos fell.

Sainsbury’s said it expected its full-year profit to rise by around 7% to more than £1bn.

Commenting on whether Sainsbury’s would absorb higher costs or pass them onto its shoppers through raising prices, Mr Roberts said it will do “everything it can” to avoid doing so.

However, Sainsbury’s was one of 80 retailers which warned in November that price rises were a “certainty” following the Budget.

Mr Roberts said on Friday that Sainsbury’s was making “balanced choices”.

“We make a colleague pay rise every year,” he said, but added that it was implementing the pay rise in two phases “because of we need to mitigate the impact of cost inflation coming at us”.

Wages for Sainsbury’s and Argos workers will rise from £12 to £12.45 per hour in March before a further increase to £12.60.

For people in London, pay will increase from £13.15 to £13.70. The hourly rate will then be lifted to £13.85.

Sainsbury’s current hourly wage is higher than the National Living Wage of £11.44 an hour.

Chancellor Rachel Reeves announced in the Budget that it will increase to £12.21 from April. She also detailed the rise in National Insurance payments by employers which Sainsbury’s has said will cost the firm around £140m.

Reeves said at the time said she had “decided the right thing to do was to ask businesses and the wealthiest in our country to pay a bit more”.

In its trading update, Sainsbury’s said it expected its full-year profit to rise by around 7% to more than £1bn.

But Mr Roberts said he would support reversing the “unexpected” National Insurance rise.

“If there was the ability to review that decision, it would be welcomed,” he said.