Major UK supermarkets are facing a concerted investor campaign to restore pay rates for workers to the real living wage, as a growing number of retailers quietly abandon previous commitments to the voluntary benchmark despite implementing recent pay hikes.
Investor pressure mounts at AGMs
The campaign is being led by the investor activist group ShareAction, which has announced it will make firm commitments on pay a “major focus” at the upcoming annual general meetings of the country’s largest grocery chains. Louise Eldridge, head of good work at ShareAction, expressed disappointment that supermarkets which had set the pace were now moving away. “The latest Living Wage rise reflects higher living costs, but that’s exactly why paying people a wage they can actually live on is so important,” she stated.
ShareAction argues that investors have been pressing these companies on the proven business benefits of better pay, from improved morale to lower staff turnover and higher productivity. This push follows previous direct engagement; in July 2024, the group questioned Tesco, Marks & Spencer, and Sainsbury’s at their AGMs regarding pay for contracted workers and Living Wage accreditation, but saw these calls rejected by the companies’ directors.
Which supermarkets have dropped the commitment?
The scale of the retreat from the real living wage is now clear. Marks & Spencer was revealed last month to no longer offer pay in line with the benchmark, despite a wage increase of at least 6.4%. The company has stressed it never formally committed to the living wage. The Co-operative Group also dropped its previous “long-standing commitment” when it announced a 3.5% pay rise from April, though a spokesperson noted it had aligned its lowest rates with the real living wage in recent years without being formally accredited.
The sector’s two largest players, Tesco and Sainsbury’s, have not matched the real living wage since 2025, though both pay above the national minimum. A Sainsbury’s spokeswoman highlighted that the group had increased hourly wages by 42% in the past five years, while Tesco said its wages had risen 43% over the same period, with workers benefiting from a “competitive reward package”.
Waitrose, owned by the John Lewis Partnership, increased shop staff pay by 6.9% from April but only matches the real living wage for employees within the M25. The notable exceptions are the discount chains Aldi and Lidl, which remain the only major supermarkets paying entry-level shop staff the real living wage nationwide. Aldi’s hourly rate exceeds the benchmark, and the retailer is also noted as the only supermarket to offer paid breaks—a benefit worth over £900 annually for the average store worker. Lidl, which was the first UK company to commit to a living wage back in 2015, also aims to match the benchmark.
The crucial gap: statutory minimum versus real living cost
At the heart of the dispute is a critical difference between two figures. From 1 April, the government’s statutory National Living Wage for those aged 21 and over rose to £12.71 per hour—the largest cash increase in its history. This is the legal minimum employers must pay.
The real living wage, however, is a separate, voluntary benchmark independently calculated by the Living Wage Foundation to reflect the true cost of living. It is currently set at £13.45 an hour nationally and £14.80 in London. This distinction means a worker on the statutory minimum in London earns £2.09 less per hour than the real living wage rate. The campaign occurs against a stark backdrop: polling shows many earning below the real living wage have faced severe financial hardship, including visiting food banks and skipping meals.
Research underpinning the real living wage consistently highlights business benefits for employers who pay it. Studies show 86-87% of accredited companies report an improved reputation, 62-66% see better recruitment, and a third report increased staff motivation and retention. Furthermore, 85% of investors state that investment in employees is important in their decision-making, with 62% specifically considering Living Wage Employer accreditation.
Industry cost pressures bite
Supermarkets argue they are operating under intense financial strain. ShareAction acknowledges retailers are “under real pressure,” citing steep industry cost increases. These include higher employer National Insurance contributions following a tax hike in April 2023, rising operational costs, and persistent inflation. Food inflation alone peaked at 19.1% in March 2023, placing sustained pressure on the sector. Additional burdens come from increased logistics costs due to fuel prices, driver shortages, and regulatory changes.
The tension highlights a broader corporate dilemma: balancing the demonstrable benefits of being a high-wage employer against immediate and severe cost pressures. With investors now formally putting the issue on AGM agendas, the coming months will test whether supermarkets see the real living wage as an unaffordable luxury or a fundamental component of sustainable business, as its proponents argue.
