Asda is planning to cut pay for about 7,000 workers in stores close to London by about 5% despite the surge in the cost of living in Britain.
The UK’s third biggest supermarket, which was bought by the billionaire Issa brothers and private equity firm TDR Capital in 2020, said it was in consultation about removing a 60p an hour supplement from workers at 39 stores sited outside the M25 but near to the capital.
Asda’s new owners have been looking to make savings across the business as the cost of debt on their £7bn deal has soared since they took control. They are reportedly considering a merger with their petrol forecourts business EG to reduce their joint debt burden.
The proposal is the latest in a run of cost-cutting moves from Asda including reducing premiums for delivery drivers in the autumn and closing pharmacies and changing night shifts earlier this year.
The GMB union, which represents many of the supermarket’s workers, said the proposed pay cut for those near London was “classic private equity slash and burn tactics” ahead of the potential merger.
Nadine Houghton, GMB organiser, said: “Cutting the pay of 7,000 low-paid retail workers during a cost of living crisis is inexcusable.”
She said the cost cuts were part of preparation for the proposed tie-up with EG and called on the government to block it. Houghton said: “If the business secretary [Kemi Badenoch] allows this merger to go ahead, she will be responsible for allowing a deal that is bad for workers, bad for consumers and bad for the high street.
“These slash and burn tactics, along with food and fuel price increases, will only ramp up if the merger goes ahead.”
The union said it was concerned that workers who did not agree to change their contracts would be threatened with so-called “fire and rehire” tactics, under which anyone failing to agree could lose their job.
Asda said no final decision had been made on the pay cut for the 7,000 staff but it was considering making the change as none of its rivals paid a similar supplement in those areas.
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Asda introduced a 10% pay rise for all hourly paid shopfloor workers to a minimum of £11 an hour last month and has pledged to increase pay to £11.10 an hour from July. Workers in London and, until now, those near to the capital are paid more because of the higher cost of living there.
A spokesperson for Asda said: “We are holding a collective consultation in a small number of stores outside the M25 where colleagues are currently paid a legacy location supplement.
“This supplement is out of line with the wider retail market and has created an anomaly where some Asda colleagues in stores that are close together are paid different rates. As part of this consultation, we are discussing a compensatory payment for colleagues in return for the removal of this location supplement, if the proposal goes ahead.”
