Tesco announces scheme to provide pay advances to store workers

Retail giant Tesco is offering its employees salary advances to help them cope with the worsening cost of living crisis.

Britain’s largest supermarket has already raised staff salaries twice this year, most recently last week when it raised basic hourly wages by 20 pence to £10.30 and to £10.98 for workers in London.

It has now announced that most workers can apply to receive up to a quarter of their contractual wages early, although they will have to pay a fee of £1.49 to the lender Salary Finance for each withdrawal.

The FTSE 100 company said the measure could help many people avoid high-interest debt, such as payday loans, to pay their bills.

Tesco trialled the program with more than 6,000 employees across Liverpool last year, with just over half of participants using it to cover unexpected costs, the company said.

Employees operating in the Republic of Ireland, Tesco Bank, One Stop convenience stores, food wholesaler Booker and customer data subsidiary Dunnhumby are not eligible for the programme.

James Goodman, People Director of Tesco UK, said: ‘We know that colleagues can be confronted with unexpected bills, such as car repairs or washing machine replacement, which can put them short.

“To lend a hand with their financial well-being, we launched a simple and low-cost way to access some of the money they’ve already earned. We hope this helps to support colleagues, especially in the run up to Christmas.”

The widespread rollout of the scheme comes at a time of rising food and energy prices, which helped push UK inflation to a 41-year high of 11.1 percent last month.

Tesco has increased basic hourly wages for shop workers by 8 per cent this year as widespread labor shortages force companies to raise wages significantly to attract and retain workers.

Meanwhile, Thursday’s autumn statement included an assessment from the Office for Budget Responsibility that predicted UK households would see their real disposable income fall by 7.1 percent over the next two years.

Retailers are increasingly grappling with the question of how to support their staff and keep prices affordable while facing much higher costs that are putting pressure on their profit margins and seeing their customers’ budgets come under pressure.

In its interim results published last month, Tesco revealed that pre-tax statutory profit fell by £730m to £413m, despite marginal revenue growth to £28.2bn.

The supermarket chain cut its annual profit forecast as it stated that the prices of more than 1,000 products, such as oven chips, coffee and toothpaste, would be frozen until next year.

Tesco shares were up 0.9 percent on Friday morning to 228.6 pence, though their value has fallen by about 18 percent over the past 12 months.