Tesco launches scheme to offer store workers advance payments to help with unexpected bills
- Britain’s biggest supermarket has already raised the wages of its employees twice this year
- Widespread program rollout comes amid soaring food and energy prices
- Staff can apply for up to 25% of their contractual remuneration in advance under the program
Retail giant Tesco is offering payday advances to its employees to help them cope with the worsening cost of living crisis.
Britain’s biggest supermarket has already raised staff pay twice this year, most recently last week when it raised the basic hourly rate by 20p to £10.30 and £10.98 for London workers.
He has now announced that most employees can apply to receive up to a quarter of their contract salary in advance, although they must pay a fee of £1.49 for each withdrawal to loan provider Salary Finance.
Financial aid: Supermarket giant Tesco has announced a scheme that will allow most workers in its stores to apply to receive up to a quarter of their contract salary earlier
The FTSE 100 company said the measure could help many people avoid taking on high-interest debt, such as payday loans, in order to pay their bills.
Tesco piloted the scheme with more than 6,000 workers last year in Liverpool, with just over half of participants using it to meet an unexpected expense, according to the company.
Staff operating in the Republic of Ireland, Tesco Bank, One Stop convenience stores, food wholesaler Booker and customer data subsidiary Dunnhumby will not be eligible for the scheme.
James Goodman, human resources director for Tesco in the UK, said: “We know that colleagues can face unexpected bills, such as car repairs or the replacement of a washing machine, which can leave them short.
“To give them a helping hand with their financial well-being, we’ve launched…a simple and inexpensive way to access some of the money they’ve already earned. We hope this will help support our 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 has helped push the UK’s inflation rate to 11.1%, its highest level in 41 years, last month.
Tesco has raised the basic hourly rate for store workers by 8% this year as widespread labor shortages force businesses to raise wages dramatically to attract and retain workers.
Meanwhile, Thursday’s autumn statement included an assessment from the Office for Budget Responsibility which predicted that UK households would see their real disposable income fall by 7.1% over the next two years.
Retailers are increasingly wondering how to support their staff and keep prices affordable while incurring much higher costs that squeeze their profit margins and see their customers’ budgets stretched.
In its interim results released last month, Tesco revealed that statutory pre-tax profits fell by £730m to £413m despite marginal revenue growth to £28.2bn.
The supermarket chain lowered its full-year profit forecast by saying prices for more than 1,000 products, such as oven fries, coffee and toothpaste, would be frozen until next year.
Tesco shares rose 0.9% to 228.6p on Friday morning, although their value has fallen around 18% in the past 12 months.