M&S's Wage Hike Masks a Retreat from Real Living Wage Commitment

A £70 million pay rise sounds generous, but when Marks & Spencer's new hourly rates fall short of the real living wage by just 4p outside London and 6p in the capital, the announcement looks less like generosity and more like a calculated retreat. The retailer made an explicit commitment to the voluntary benchmark barely a year ago. Now it's quietly stepping back whilst celebrating what it calls a "leading package of benefits."

From 1 April, M&S will pay its 55,000 store staff £13.41 per hour nationwide, rising to £14.74 in London. That represents a 6.4% increase, which the company has trumpeted as "inflation-beating" and part of a £350 million investment in wages over four years. Chief executive Stuart Machin called it "a good cost" that reflects "the central role our people play as we reshape M&S for growth."

What he didn't mention is that in March last year, M&S explicitly stated it had aligned its pay with the real living wage—a voluntary benchmark calculated by the Living Wage Foundation to reflect actual living costs, not just statutory minimums. That threshold currently sits at £13.45 outside London and £14.80 in the capital. The new rates fall measurably short.

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The pennies that matter

The gap is minimal in absolute terms. But it's substantial in what it signals. This appears to be a deliberate policy shift rather than an accidental misalignment, particularly given M&S's public commitment to the benchmark just twelve months ago.

This appears to be a deliberate policy shift rather than an accidental misalignment, particularly given M&S's public commitment to the benchmark just twelve months ago.

The real living wage isn't a legal requirement. It's a voluntary standard that organisations adopt to demonstrate corporate responsibility and attract staff in competitive labour markets. Over 15,000 UK employers have signed up to it, and many use it as a selling point with both customers and potential recruits. For M&S to position itself as having met this standard, then quietly step away whilst simultaneously celebrating a "leading package of benefits," suggests the company has run the numbers and decided the savings outweigh the reputational cost.

ShareAction, a shareholder activist group focused on responsible investment, has called on M&S to restore the alignment. Louise Eldridge, the organisation's head of good work, described the real living wage as "vital for workers' livelihoods" and highlighted what she called the "proven benefits" for businesses, including reduced staff turnover and improved talent recruitment. According to ShareAction, the decision makes M&S "another major supermarket" stepping back from the only independent cost-of-living benchmark available.

Context that complicates the narrative

M&S's £350 million pay investment figure spans four years and covers multiple wage increases, including this latest one. The company posted profit before tax of £716.4 million for the year ending March 2024, up from £475.4 million the previous year. Against that backdrop, the decision to save what likely amounts to a few million pounds annually by falling short of the living wage threshold starts to look like penny-pinching dressed up as largesse.

The 6.4% increase does exceed the current inflation rate, which stood at 2.8% in January according to the Office for National Statistics. Technically, M&S's claim of an "inflation-beating" rise is accurate. But inflation measures price changes against a previous baseline—it doesn't measure whether wages meet the actual cost of living. An inflation-beating pay rise still leaves workers worse off if their previous wages were already insufficient.

The retail sector has faced mounting pressure from rising business rates, increased employer National Insurance contributions announced in the autumn Budget, and persistent cost-of-living concerns among customers affecting spending patterns. Other major retailers have flagged similar pressures. But most of those pressures haven't prevented record profits at several supermarket chains, raising questions about whether wage compression is a necessity or a choice.

A sector-wide signal

What makes this particularly noteworthy is the precedent it could set. If a high-street name like M&S—one that has traditionally positioned itself as a premium employer—can step back from the real living wage with minimal backlash, other retailers may follow. Several major supermarkets currently pay at or above the real living wage threshold, but none are contractually obligated to maintain that position.

If a high-street name like M&S can step back from the real living wage with minimal backlash, other retailers may follow.

The retail sector employs roughly 3 million people across the UK, according to the British Retail Consortium. Any widespread retreat from voluntary wage commitments would affect hundreds of thousands of workers, many of whom are already navigating rising housing costs, energy bills, and food prices that have climbed faster than general inflation over the past two years.

Whether other retailers quietly make similar adjustments in their next pay rounds will be the real test. M&S may have just shown them how to do it: announce a percentage increase that sounds impressive, frame it against inflation rather than living costs, and hope the 4p shortfall gets lost in the positive headlines. For a company reshaping itself for growth, as Machin put it, walking away from a voluntary wage standard for the sake of a few pence per hour looks less like strategic necessity and more like a revealing choice about priorities.

More articles by David Adams