IKEA to go beyond National Living Wage rate

Swedish firm Ikea will become the first national retailer in the UK to pay staff above the government’s new National Living Wage from next year.

Ikea, well known for its flatpack , self-assembly furniture, said it would pay all its 9,000 UK workers at least £7.85 an hour from April 2016. The rate for employees in London will be £9.15 an hour.

The existing minimum wage for those over 21 is £6.50 an hour.

Ikea said it would instead pay all 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.

About half of its 9,000 UK employees will benefit from the decision.

Rhys Moore, director of the Living Wage Foundation, said: “This is a huge step for the British retail sector and we hope that many other businesses will follow the leadership IKEA is showing on the issue of basic pay.”

Ikea is the UK’s biggest furniture retailer with 18 stores and plans to open more in Sheffield, Reading, Exeter and Greenwich in southeast London.

Last year Ikea said it would raise the minimum wage for its US retail employees by an average of $1.59 an hour to $10.76 (£6.89) in 2015.

In recent weeks, pressure groups and individuals have been turning up at the annual shareholder meetings of retailers such as Tesco, Next and Ocado to demand better pay for workers.

The Living Wage Foundation has accredited more than 1,600 businesses, including nearly a quarter of the FTSE 100 and well-known companies such as Nestlé, Nationwide and British Gas – but until now, the only household name retailer that had signed up was Burberry.

Ikea’s move comes soon after Chancellor of the Exchequer George Osborne used his post-election budget to announce that the £6.50-an-hour minimum wage would be renamed as the “national living wage” and rise next April to £7.20 for people aged over 25, with further increases to “over £9” by 2020.