Retail pay has increased 40% since 2020
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What is the current state of retail pay and its increase since 2020?
Now, this is Breakfast Business with me, Emmet Oliver.
You're very welcome along. As you know, over the last few weeks and into the next few weeks, we'll be spending a lot of time where? Well, in retail premises, shops of all kinds, whether they're pop-up or more stationary or otherwise. And a lot of them are struggling or certainly facing a lot of headwinds at the moment. One of those is pay. Retail pay has increased by 40% since 2020, the year of COVID. The national minimum wage is set to reach €14.15 per hour this January coming. And of course, there's a lot of other things in the pay area that retailers are having to be balanced about. Competitiveness and cost control is top of their agenda. So what exactly is happening in the sector? Nicky Moran is the Director of Grocery Retail at XL and he joins me now.
Good morning.
Good morning.
How are you? Nicky, I just wanted to ask you, first of all, we've known there's been a number of different pay components, minimum wage. It's when you put it all together, it's quite a large, large increase. Have the retailers been able to offset some of that with the price increases? Because we do see obviously inflation problems. So how are they balancing those two?
Well, I suppose when you're looking at the increase, I don't think it's reflective of inflation. So like you mentioned, it's been 40% in the last six years, where inflation is somewhere between 7% and 8% in that period. So, you know, certainly that's not picking up the difference there. If you talk in real numbers, you know, you're seeing about 1,300 increase per employee in the store, which in a convenience store costs about 40,000 a year and in a supermarket is about 130,000 a year. So, again, I think, you know, many people would accept that they're not seeing their grocery bills going up quite that much. So, no, we're... The difference that's been covered is from the retailer's margin from their bottom line.
Yeah, and it's worth going into the different elements to it. You've got auto enrolment on the pension side, you've enhanced sick pay, higher insurance premiums, like everybody, I suppose, higher energy costs. And of course, you've got this deposit return scheme, which also is chipping in a little bit of a cost nudge up as well. So can you just walk me through which one of those is the most impactful for the sector?
I will say the retailers will stand over that the labour costs are where the biggest squeeze is coming from. But I think you're looking at really a perfect storm here. So because you're seeing increases from every direction. So, you know, you've mentioned insurance, but it's the retail crime that's, you know, it's impacting the stores quite significantly. And that's knocking on their insurance costs. It's knocking on the employees' well-being and welfare costs. And then on the other side, you're looking at the labour costs, which are becoming astronomical for stores, like we've just mentioned. And so it's really creating that perfect storm for retailers at the moment.
Yeah, and you've broken out the different roles. You've got trainee managers at about €35,000, store managers at €45,000. You've got produce managers at €35,000, a deli manager at €38,000 a year. I mean, you can see it right coming, a security officer, a retail security officer at about €16,000. I mean, it's right across the board, in or around the same increases for them all, I suppose. So it's interesting to see it right across the board.
How are retailers managing the impact of rising labor costs?
It's very broad-based.
Yeah, so it's kind of a knock-on effect is what you're seeing there. So when the minimum wage goes up for your junior staff or your entry-level staff, you're looking at the supervisors, the training managers and the department managers, and they're looking to maintain that difference between them and the staff below them. And then that has a knock-on up the way. You're seeing an increase in fresh food. We've seen that again and again because a lot of stores are... looking for exceptional talent around fresh food. So they're willing to pay a little bit more for that.
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