(Bloomberg) -- J Sainsbury Plc has advised shareholders to vote against a resolution forcing the UK’s second-largest grocer to commit to wage levels calculated by a campaigning organization.
More than 100 investors, including HSBC Holdings Plc, Legal & General Investment Management and Fidelity International demanded in March that Sainsbury accredit itself with the Living Wage Foundation, which has established a minimum hourly rate necessary for workers to afford basic needs, by the middle of next year. The resolution will be voted on at the annual meeting in July.
Sainsbury already began paying all its workers the foundation’s so-called “real living wage” this month. The grocer said forcing it to become an accredited living wage employer would hand too much control to a third party at a time the country is facing a cost-of-living crisis.
In a letter to investors this week chairman Martin Scicluna said the grocer spends 4 billion pounds ($5 billion) on staff pay each year -- the single largest operating expense -- and it must have flexibility to manage that cost.
“As a business that makes a profit of around 3p in every £1, we have to consider all of our investment decisions very carefully and balance the needs of our customers, our colleagues and our shareholders,” he said in the letter.
The current real living wage rate is 11.05 pounds ($13.79) in London and slightly lower outside the UK capital. While half of the companies in the FTSE-100 are accredited by the foundation, none of the U.K. supermarket operators have signed up yet. It’s also not universally accepted as the minimum needed to live.
UK Inflation Surge Means an End to Decades of Super-Cheap Food
Supermarkets are grappling with the highest inflation since the 1980s while trying to keep prices low, invest in online and properly reward their staff. Sainsbury, which employs 189,000 people, is expecting profit to fall this year as shoppers are squeezed by higher costs including food, energy and petrol.
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