Costa Coffee announces 9% pay rise for UK workers ahead of national minimum wage hike

Costa Coffee pay rise: Costa Coffee, a prominent coffee and sandwich chain in Britain and a subsidiary of Coca-Cola Co, has revealed plans to implement a significant pay increase for over 15,000 hourly-paid employees, effective April 1. The move comes in response to the government's mandated minimum wage hike and will see an average pay rise of 9 per cent for its workforce.

The announcement signifies a proactive response to the forthcoming increase in the government's national living wage, set to rise by 9.8 per cent to £11.44 an hour in April. Costa Coffee's starting rate will jump from £10.70 to £12 per hour, surpassing the impending national living wage hike.

The decision by Costa Coffee to raise wages is poised to attract attention from the Bank of England, which closely monitors wage settlements as part of its assessment of interest rate trends. Concerns persist within the Bank that rapid wage growth could exacerbate inflationary pressures across the broader economy.

While worker wages in the UK have recently begun to outpace inflation, which remained at 4 per cent in January—double the central bank's 2 per cent target—the move by Costa Coffee reflects a commitment to ensuring fair compensation for its employees amidst the challenging economic landscape.

With a network of 1,500 company-owned stores nationwide, Costa Coffee's wage increase will not only benefit entry-level employees but also reward more experienced baristas, who will see their pay rise to a minimum of £12.33 per hour. Additionally, staff based in central London will receive an extra £1 per hour, further enhancing their earnings potential. The company also plans to offer targeted bonuses as part of its employee incentive program.

This wage hike follows similar moves by other major UK employers, including Sainsbury's, the country's second-largest supermarket chain, which announced a 9.1 per cent increase in workers' pay in January. Discount retailers Aldi and Lidl, as well as e-commerce giant Amazon, have also committed to raising wages in 2024, underscoring a broader trend of improving compensation for hourly workers across various sectors in the UK.

(With Reuters inputs.)