Marks and Spencer will invest £95m into higher pay for its retail staff, despite “cost pressures” from the government.
From 1 April, the rate of pay for UK Customer Assistants will increase from £12 to £12.60 per hour, up five per cent year on year and up 26 per cent since 2022.
It is higher than the government’s new national living wage of £12.21 per hour.
“Following the Government’s recent increases in tax and national insurance contributions, it’s no secret that M&S and indeed the entire retail sector has some significant cost headwinds to face into in the new financial year,” M&S Chief executive Stuart Machin said.
“However, I have always believed that we should not allow these headwinds to impact our hourly paid colleagues, which is why today, for the third year in a row, we are making a record investment in our retail pay offer.
“This means we have now invested almost £300m in our pay over the past three years, well above the rate of inflation, in addition to our market-leading discount and pension offer for colleagues,” Machin added.
Prior to this announcement, Marks and Spencer estimated that the increase in employers’ national insurance (NICs) would add £120m to its wage bill—a figure that will only rise.
The change to NICs, particularly the lower threshold, came as a shock to businesses in labour intensive, part-time reliant businesses like hospitality and retail.
Research from UKHospitality has found that changes to national insurance contributions (NICs) will add £2,500 onto the cost of employing the average worker.
Earlier this year, M&S was part of a heavyweight group of retailers who warned the Treasury that hundreds of thousands of jobs were at risk in the retail sector due to unsustainable cost hikes.
At the time, Machin said that “retail is being raided like a piggy bank and it’s unacceptable”.
“The blunt truth is… the budget means UK retail will get smaller,” Machin wrote in The Times, adding that while Reeves’ long-term growth ambitions are welcome “action [needs to be] taken to encourage growth today”.