Sainsbury asks investors to reject proposal on ‘living wage’ resolution
LONDON: J Sainsbury Plc has advised shareholders to vote against a resolution forcing the United Kingdom’s second-largest grocer to commit to wage levels calculated by a campaigning organisation.
More than 100 investors, including HSBC Holdings Plc, Legal & General Investment Management and Fidelity International demanded in March that Sainsbury accredit itself with the Living Wage Foundation.
The foundation has established a minimum hourly rate necessary for workers to afford basic needs, by the middle of next year.
The resolution will be voted on at the annual meeting in July.
Sainsbury already began paying all its workers the foundation’s so-called “real living wage” this month.
The grocer said forcing it to become an accredited living wage employer would hand too much control to a third party at a time the country is facing a cost-of-living crisis.
In a letter to investors this week chairman Martin Scicluna said the grocer spends £4bil (Rm22bil) on staff pay each year – the single largest operating expense – and it must have flexibility to manage that cost.
“As a business that makes a profit of around three pence (16 sen) in every £1 (RM5.48), we have to consider all of our investment decisions very carefully and balance the needs of our customers, our colleagues and our shareholders,” he said in the letter.
The current real living wage rate is £11.05 (RM61) in London and slightly lower outside the UK capital.
While half of the companies in the FTSE100 are accredited by the foundation, none of the UK supermarket operators have signed up yet.
It’s also not universally accepted as the minimum needed to live.
Supermarkets are grappling with the highest inflation since the 1980s while trying to keep prices low, invest online and properly reward their staff.
Sainsbury, which employs 189,000 people, is expecting profit to fall this year as shoppers are squeezed by higher costs including food, energy and petrol.
It has been reported that profits at Sainsbury have more than doubled but the supermarket has warned it faces tougher times ahead as shoppers try to “watch every penny” amid the rising cost of living.
Sainsbury said it was trying to limit price increases despite facing higher costs from suppliers.
“We can see the early signs of customers being a bit more cautious, watching every penny, every pound,” chief executive Simon Roberts has been quoted as saying.
Supply chain issues, the Ukraine war and rising raw material costs are all contributing to soaring food prices. The situation in Ukraine was said to be pushing up the costs of food production, with the country being a large exporter of fertilisers.