The changes to Marks & Spencer’s pay and pension scheme will make the company more sustainable “in the long term”, chief executive Steve Rowe said at the retailer’s annual general meeting yesterday.
As previously reported by Drapers, M&S is proposing axe extra pay for Sunday shifts and introduce a flat rate for bank holidays.
It plans to increase the base rate for qualified customer assistants to £8.50 an hour outside London and £9.65 for those in Greater London from next April, as well as introducing pay rises for section co-ordinators and section managers, benefiting 62,000 staff.
The retailer also plans to close its UK defined benefit pension scheme for future service accrual – it has been closed to new members since 2002 – and enrol existing members in its defined contribution savings plan from next April. This will affect 11,000 employees.
Last month, trade union USDAW said it had been contacted by M&S workers who were “very concerned” about the changes.
Speaking to shareholders at the AGM, held at Wembley Stadium, Rowe said the pay proposals would allow the chain to deliver “some of the highest wages in retail”.
He said a small number of M&S staff will be adversely affected by the pay plans, but those workers will compensated for the first two years.
M&S came under fire last week when it reported an 8.9% year on year fall in clothing and homeware sales, after it pushed its summer Sale back by two weeks and reduced promotional activity.
Rowe said this was “unacceptable”, but appealed to shareholders for their patience: “I know that it is a big ask for me to stand here today with a new set of ideas for you trust me that things will be different this time.”
He added: “We will have further complex decisions to make as we go forward but they will always be taken to give M&S a long term approach.”
M&S also revealed plans to create a shareholder panel to help scrutinise its performance as Rowe implements his turnaround plan.
Chairman Robert Swannell told investors that the company wanted to listen to them as a series of changes are made at M&S.
Rowe said the retailer had already held a lunch with some shareholders, and as a result of the feedback had ordered twice as many cardigan-style coats than originally planned and in an additional colour.
“With you on our side we will grow our business”, he told the AGM.