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Swedish furniture retailer Ikea has announced it will pay all of its UK workers the higher rate living wage from April next year.

The employer will pay its London workers £9.15 an hour and staff based outside the capital £7.85 per hour as per the rates set by the Living Wage Foundation, which are higher than the compulsory rate increase announced by the Chancellor in his summer Budget earlier this month.

Ikea has estimated that this will benefit more than half of their 9,000 staff, or ‘co-workers’ as they are called.

Ikea is the first major nation-wide retailer to sign up for living wage accreditation. More than 1,500 UK employers already pay the voluntary wage, including professional services firm KPMG, law firm Linklaters and charity Save The Children. Other retailers who are accredited living wage employers include luxury goods company Burberry and upmarket food retailer COOK.

The national minimum wage is currently £6.50 for those aged 21 and over. However, in his summer Budget, chancellor George Osborne announced that he would be introducing a ‘national living wage’. This will compel all employers to pay staff £7.20 an hour from next April, rising to more than £9 by 2020.

Gillian Drakeford, Ikea UK and Ireland country manager, said: “Introducing the living wage is not only the right thing to do for our co-workers, but it also makes good business sense. This is a long-term investment in our people based on our values and our belief that a team with good compensation and working conditions is in a position to provide a great experience to our customers.”

And, Ryan Moore, director of the Living Wage Foundation, said: “This is a historic moment in the life of the living wage movement, as Ikea become the first national retailer to announce their commitment to the living wage and they will reward all their staff with an hourly rate of pay that covers the cost of living. This is a huge step for the British retail sector and we hope that many other businesses will follow the leadership Ikea is showing on the issue of basic pay.”

The announcement is expected to put pressure on other retailers to up their hourly pay.

Mike Coupe, chief executive of Sainsbury’s, faced criticism for suggesting that the supermarket could only afford to pay more if it started taking away other perks, such as the discount card.

Meanwhile, Malcolm Walker, founder and chief executive of Iceland, dismissed retailers’ excuses for refusing to increase their pay in the Mail on Sunday. He said that supermarkets had a “moral duty” to pay a higher wage.

Commenting on Ikea’s announcement, Helena Dickinson, director general of the British Retail Consortium, said: “Following the chancellor’s Budget announcement every retailer has a timeline led by the Low Pay Commission to deliver higher rates of pay. For all retailers their workforce is a crucial part of how they deliver to customers each and every day and they take the way that people work and how they are rewarded very seriously. This is demonstrated by the collegiate relationships many have with trade unions and the fact that 95 per cent of retail staff are already paid above the minimum wage, despite one in every three being under 25.”

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