M&S's Pay Rise Falls Short: A Signal for Retail Wage Standards

Marks & Spencer has handed 55,000 store workers a 6.4% pay rise that still leaves them earning less than what independent analysts say is necessary to cover basic living costs. The retailer's new hourly rates fall just pennies short of the real living wage benchmarks—but more significantly, they represent a quiet abandonment of a commitment the company made barely two years ago. The reversal matters because M&S isn't just any employer, and the signal it sends across the high street could reshape voluntary wage standards across retail.

The Four-Pence Difference

M&S now pays 4p per hour below the independently calculated real living wage of £13.45 nationally, and 6p below London's £14.80 benchmark. These figures, set by the Living Wage Foundation, are based on actual household costs—food, rent, transport, childcare—rather than political negotiation. They represent what researchers calculate workers genuinely need, not what the statutory minimum dictates.

The distinction between these two wage floors has grown more pronounced. From April, the government's national minimum wage rises to £12.71 for over-21s, meaning M&S can legitimately claim to pay 70p above the legal requirement. Chief executive Stuart Machin described the increase as "inflation-beating" and emphasised the company's £350m investment in staff pay over four years, representing a 34% cumulative increase.

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Annual inflation has indeed cooled from its recent peaks, but cumulative price increases since 2020 have fundamentally reset living costs for Britain's lowest earners.

A pay rise that beats this year's inflation rate doesn't recover ground lost when prices surged faster than wages. Inflation-beating is a relative measure, and the baseline matters.

What Changed at M&S

The timing of M&S's retreat is particularly revealing. Last March, the company made explicit its commitment to real living wage alignment. Twelve months later, with a £70m pay investment announced, that commitment has simply evaporated from its public messaging. No explanation accompanied the shift, just revised hourly rates that fall marginally short.

ShareAction, the shareholder activist group pressing M&S to reconsider, argues that real living wage alignment delivers measurable business benefits. Louise Eldridge, the organisation's head of good work, pointed to reduced staff turnover and improved talent attraction as documented advantages. Research from the Living Wage Foundation suggests accredited employers experience 25% lower turnover rates, though M&S hasn't published comparative data from its own operations.

The question shareholders might reasonably ask is whether the four-pence differential—roughly £80 annually for a full-time worker—justifies the reputational cost. M&S has spent years rebuilding its brand as a responsible employer after difficult periods of store closures and redundancies. Walking back a voluntary commitment undermines that positioning for remarkably modest savings.

Sector-Wide Implications

What makes M&S's decision particularly concerning is its potential to normalise similar retreats across retail. When a major employer abandons a voluntary standard, it creates permission for competitors to follow. The real living wage has always been optional, sustained by corporate willingness rather than legal obligation.

If economic pressures make that willingness unsustainable even for profitable retailers, the benchmark risks becoming aspirational rather than achievable.

M&S reported operating profit of £516m in its most recent half-year results, with food sales performing strongly. The company isn't struggling financially in ways that might explain an inability to meet voluntary wage commitments. This makes the withdrawal look more like strategic choice than economic necessity.

Other major retailers now face a similar calculation. Tesco, Sainsbury's, and Asda have each made varying commitments to staff pay, but none consistently match real living wage rates across all locations and roles. M&S's decision removes competitive pressure to raise standards, potentially freezing wages across the sector at levels that independent analysts consider insufficient.

The broader context is equally troubling. As government minimum wage rates rise—albeit slowly—the gap between statutory requirements and actual living costs persists. The real living wage exists precisely because the political process doesn't close this gap. When voluntary corporate action also fails to bridge it, low-wage workers are left dependent on a minimum wage that campaigners argue remains inadequate.

M&S will implement its new pay rates from 1 April, the same date the national minimum wage increases. Whether shareholders succeed in pressing the company to reconsider remains uncertain, but the precedent has been set. For Britain's retail workers, the distance between headline pay rises and genuine living wage security just got slightly wider—four pence per hour wider, to be precise.

More articles by Ross Williams