Retail giant Tesco is offering salary advances to its employees to help them cope with the worsening cost-of-living crisis.
Britain’s largest supermarket has already raised staff pay twice this year, most recently last week when it increased the basic hourly rate by 20p to £10.30 and to £10.98 for workers in London.
It has now announced that most employees can apply to receive up to a quarter of their contractual pay early, though they must pay a £1.49 fee for every withdrawal to the loan provider Salary Finance.
Financial help: Supermarket giant Tesco has announced a scheme that will allow most of its store employees to apply to receive up to a quarter of their contractual pay early
The FTSE 100 company said the measure could help many people avoid incurring high-interest debts, such as payday loans, in order to settle their bills.
Tesco trialled the scheme with over 6,000 workers last year across Liverpool, with just over half of participants using it to deal with an unexpected expense, according to the business.
Staff operating in the Republic of Ireland, Tesco Bank, One Stop convenience outlets, food wholesale operator Booker and customer data subsidiary Dunnhumby will not be eligible for the programme.
James Goodman, Tesco’s UK people director, said: ‘We know that colleagues can face unexpected bills, such as car repairs or replacing a washing machine, which can leave them short.
‘To give them a helping hand with their financial well-being, we have launched…a simple and low-cost way to access some of the money that they have already earned. We hope this helps to support colleagues, particularly in the run-up to Christmas.’
The scheme’s widespread rollout comes at a time of surging food and energy prices, which helped drive the UK’s inflation rate to hit a 41-year high of 11.1 per cent last month.
Tesco has hiked the basic hourly rate for store employees by 8 per cent this year, as widespread labour shortages force companies to significantly elevate pay to attract and retain workers.
Meanwhile, Thursday’s Autumn Statement included an assessment from the Office for Budget Responsibility that predicted British households would see their real disposable income decline by 7.1 per cent over the next two years.
Retailers are increasingly contending with how to support their staff and keep prices affordable while incurring much higher costs that are squeezing their profit margins and seeing their customers’ budgets stretched.
In its interim results published last month, Tesco revealed statutory pre-tax profits plummeted by £730million to £413million despite revenues marginally growing to £28.2billion.
The supermarket chain lowered its annual earnings forecast as it declared that prices on over 1,000 products, such as oven chips, coffee and toothpaste, would be frozen until next year.
Tesco shares were up 0.9 per cent to 228.6p on Friday morning, although their value has fallen by around 18 per cent over the past 12 months.
