29/11/2016 00:15 GMT | Updated 29/11/2016 10:10 GMT

Ikea Boss Says Paying Workers The 'Real' Living Wage Has Been Crucial To Improving Business

As the Swedish giant unveils bumper sales this year.

Toby Melville / Reuters
Ikea's UK staff are paid the 'real' living wage

Paying staff the ‘real’ Living Wage and improving their terms and conditions has been crucial to the success of Ikea’s business, the boss of its UK operations has revealed.

Gillian Drakeford told The Huffington Post UK that the firm’s desire to be a great workplace for its 10,000 British employees - dubbed “coworkers” by the flat-pack giant - has helped its bottom line.

“Happy coworkers lead to happy customers. For us in retail, our people are our biggest asset,” Drakeford said.

Gillian Drakeford manages the UK for Ikea and says the Living Wage is important to the retailer's values

Ikea now pays workers £8.45 per hour outside of London and £9.75 in the capital, a move that cost the retailer £11m. By contrast the current minimum wage is £7.20, dropping to £5.30 for those under 20. 

Despite forking out more on wages (4,500 workers benefitted from the new pay grade in April 2016), the Swedish firm today announced bumper sales of £1.7bn in the UK in 2016 - up eight percent on the previous year.

Drakeford added the Living Wage was a key part of adapting to new customer behaviour. She said: “Consumer behaviour is changing. The shopper wants something different from us than they did a few years ago.

“A customer might search on the web and come better informed to the store and that means I need better informed coworkers who can co create home furnishing solutions.

“That means I need to take care that we have the right coworkers with the right experience and that they are committed to Ikea.

“And the Living Wage is one way of securing the right coworkers.” 

Toby Melville / Reuters
Ikea workers are now paid a minimum of £8.45 per hour

Ikea has also revised terms and conditions for its employees and worked to provide them with benefits such as guaranteed weekends off once a month.

“We believe this is the right thing to do for our coworkers, and from a business perspective it’s a win-win,” Drakeford said. “I was in Lakeside [in Essex] and one of our coworkers said ‘It’s so good to have time at the weekend with the family’ and I’m a strong believer as a working mum that you need time with your family.

“If you feel good at home you will show up in a better frame of mind at work. That impacts our customers.”

However, not all staff at Ikea’s suppliers including cleaners and delivery people receive a Living Wage.

“We’re working hard now and there’s still work to do,” Drakeford added.

A small number of Ikea staff have chosen to work on zero-hours contracts, she added.

Ikea plans to add near to 1,000 jobs with the opening of three new stores in Sheffield, Exeter and Greenwich over the next 18 months - all to be paid at least the Living Wage Foundation rate.

John Hannett of shop workers union Usdaw said earlier this month: “We expect decent employers to be looking beyond statutory basic rates of pay and that is why we welcome the input of the Living Wage Foundation.

“Their Living Wage rates are properly researched and reflect the hourly rate workers need to help make ends meet and provide a good benchmark for the pay bargaining agenda.”

It comes after Ikea announced sales of £1.7bn in the UK last year, up eight percent on the year before.