J Sainsbury PLC (LSE:SBRY) shareholders will vote on whether the supermarket chain should increase staff pay in line with the real living wage at its annual general meeting next month.
A resolution for Sainsbury’s to pay the real living wage has been proposed by a group including Legal & General, responsible investment group ShareAction and the manager of the Nest workplace pension scheme.
The real living wage is a voluntary rate based on living costs and is set for 2022 at £9.90 or £11.05 in London.
The coalition of investors has held talks with the FTSE 100 food retailer ahead of the meeting but their attempts to reach a compromise have “reached an impasse” and the resolution “will definitely go to a vote” according to ShareAction.
Following the initial proposal of the resolution, Sainsbury’s offered all colleagues working in a London Borough £11.05 per hour since May, having upped its base rate of pay to £10 per hour nationally in March.
But third-party contractors such as cleaners and security guards have not been offered the same rate, ShareAction said, nor has the company made an ongoing commitment to match the real living wage in future.
“This is especially important as, given the current rate of inflation, these rates are expected to rise sharply when they are re-calculated in September,” the activist group said.
Sainsbury’s has asked shareholders to vote against the resolution.
In a letter, the company’s chairman Martin Scicluna said: “Our pay rates are higher than many of our competitors and we were the first major retailer to pay our colleagues the Living Wage regardless of where they live in the UK.”
But Marks & Spencer, Lidl and Aldi have all had higher rates of pay for some time, according to research by ShareAction.
Sainsbury’s now pays £10 per hour nationally and £11.05 in London; M&S pays £10.00 per hour nationally and £11.25 in London; Lidl pays £10.10 nationally, £11.30 in London; and Aldi pays £10.10 nationally and £11.55 in London.
Aldi, Lidl, Wm Morrison Supermarkets PLC and also recently raised their hourly rates, while John Lewis pledged to pay the real living wage in March.
ShareAction said its view is that all UK companies should commit to paying all their staff the real living wage and chose to co-file the resolution with Sainsbury’s and not Tesco PLC (LSE:TSCO) based on a number of deciding factors.
"One of these is that Sainsbury’s has demonstrated leadership in other areas, such as publicly publishing their ethnicity pay gap since 2020 – the resolution provides an opportunity for them to show further leadership and influence the sector," a spokesman said.
"Additionally, Tesco negotiate their pay with a union (USDAW), while Sainsbury’s do not have a similar agreement with a union in place."