Next chief executive Lord Wolfson will take no bonus this year so the company can increase standard entry-level wages by at least 5% in its annual October wage review.
He sent a letter to staff, seen by Drapers, which said: “In the event there is a shortfall in funding, I have agreed with the board that any bonus I might be due in the year ahead, will be used to help fill the gap. Spread across so many people my future bonus might not amount to a great deal per head, but I hope at least it will convince you of the company’s sincerity and determination to improve your wages and still remain competitive.”
Next said it increased entry-level rates by 6% and increased average contract hours last year, which meant the average staff member earned a third more than two years ago.
About half of Next’s 50,000-strong workforce are employed in entry-level roles.
The pay rise for October will take the hourly rate from £6.70 to £7.04 and to an estimated £7.58 including bonuses.
The national minimum wage is £6.50 and will rise to £6.70 in October.
Lord Wolfson’s letter follows claims by Citizens UK that retailers including Next are being “subsidised” by the taxpayer as employees are forced to take in-work benefits to supplement their incomes.
The living wage, calculated by the Living Wage Foundation, is £7.85 nationally or £9.15 in London.