Shareholder activists target high street retail giants over low wages

Shareholder activists are calling on retail giants to improve transparency over low wages in their workforces.

Investor groups led by ShareAction, which campaigns for responsible investment, have put forward proposals to the boards of Next, M&S and JD Sports calling for more transparency on pay as the soaring cost of living continues to hit workers.

These will be put to shareholder votes at the firms’ annual general meetings (AGMs) over the next few weeks.

While not legally binding, support for shareholder resolutions can put pressure on business leaders to respond to the matters raised.

The firms are being asked to share more information about how many of their staff are being paid below the “real living wage” – a voluntary benchmark that is independently calculated by the Living Wage Foundation based on the cost of living.

For 2024/25, this wage is set at £12.60 per hour nationally and £13.85 per hour in London for those aged 21 and over.

This compares to the legal minimum wage, which is currently £11.44 for the whole country including London and is set to go up to £12.21 from April.

Catherine Howarth, chief executive at ShareAction, said: “The UK’s biggest retailers are failing to support their workers with a real living wage, leaving hundreds of thousands of people in the sector struggling to make ends meet.”

She argued that companies paying below the voluntary benchmark put pressure on workers, their families and ultimately public health and welfare costs, which in turn harms UK economic growth.

“The long-term orientated, responsible investors backing these resolutions are calling on companies across the retail sector, including Next, M&S and JD Sports, for the information required to assess the business risks of low pay and the affordability and business benefits of the real living wage,” she said.

“This is a critical first step to better protect their staff and make our economy fairer and healthier.”

The campaigners argue paying staff a living wage leads to business benefits such as increased productivity and reduced employee turnover.

It comes as the Living Wage Foundation estimated almost a quarter of UK retail workers – 818,000 people – are not being paid a real living wage.

ShareAction alongside other investor groups have been engaging with 11 leading retailers over the last year.

They have chosen to file resolutions at JD Sports, Next and M&S, arguing none of them have committed to properly protecting all their workers from cost of living impacts by ensuring all, including third party contractors, are paid a real living wage.

The activists also said all three firms provide either little or no information to investors on their pay approach or working towards aligning wages with the voluntary benchmark.

By co-filing the resolutions, they aim to drive up transparency around low pay as a first step to taking accountability and improving pay and conditions for low paid workers at the firms.

While M&S has recently made a significant investment in its directly paid staff by paying them over the real living wage, the activists are calling on the retailer to match this commitment for its third-party contracted staff, such as security guards and cleaners.

ShareAction argued while other supermarkets are able to provide robust information about the pay for their third-party contracted staff, M&S has not been able to share anywhere near a similar standard of disclosure in this area.

Meanwhile, neither Next nor JD Sports have committed to paying their staff a real living wage, it said.

JD Sports meets the legal minimum wage with no regional pay weighting to reflect differences in the cost of living in more expensive areas such as London, according to ShareAction.

It added that Next pays its staff the minimum wage, with some regional pay weighting for London, though this does not accurately reflect the difference in the cost of living in the area.

ShareAction also plans to engage with all UK retailers to establish a baseline across the sector for publicly sharing company practice and approaches to pay.

The Next resolution is being supported by Axa Investment Managers, Cardano Group, Epworth Investment Management, Friends Provident Foundation, Greater Manchester Pension Fund, and Trust for London.

The JD Sports resolution is being supported by Cardano Group, Friends Provident Foundation and Scottish Widows, and the M&S resolution is being supported by Scottish Widows and Friends Provident Foundation.

An M&S spokesperson said the retailer is “committed to paying our colleagues well”, saying it has invested more than £285 million in its retail pay package since 2022 and increased the standard hourly rate by over 26%.

“We pay the real living wage, with hourly pay rising to £12.60 nationally and £13.85 in London from April 1 – irrespective of age,” they said, adding that M&S offers “a market leading package of benefits”.

They added: “We strongly believe that our third party contractors should also pay their employees fairly. We welcome open dialogue with all of our shareholders, including engagement with ShareAction.”

A JD spokesperson said the firm has delivered its “highest-ever level of investment in our colleagues”, including £70 million into its workforce since 2023 and removing the age banding rates for thousands of workers under the age of 21.

They added: “All JD UK retail colleagues are compensated above the national living wage for those aged 21 and above, alongside a comprehensive benefits package available from the first day of employment.”

Next has been contacted for comment.