Warehouse seeks better workforce with higher pay, more training

Tuesday 7th May 2013

Warehouse Group, the country's biggest listed retailer, has unveiled plans to lift staff wages and create a better-trained workforce reward long-term service at an extra cost of up to $2.5 million in each of the next two years.

The Auckland-based company wants to improve the public perception of retailing and attract more talented staff, and will hike wages for team members who achieve a certain level of skills-based training and stay with the firm for at least three years, it said in a statement. The details have yet to be finalised, but the plan is expected to be introduced in two phases over the 2014 and 2015 financial years.

"While having an engaged team is about much more than just pay, pay is a significant factor," Powell said. "While this will cost the group an additional $2 million to $2.5 million in each of the 2014 and 2015 financial years, the impact on company profits is expected to be less due to increased team management, lower team turnover, improved sales and higher productivity."

Warehouse employs about 7,000 staff, and spent $169.4 million on employee expenses in the first half of the year, or about 15 percent of its $1.11 billion revenue.

For qualifying Warehouse staff it will increase their overall package to between $18.50 an hour and $20 an hour, adding $50 to $100 to their weekly pay. For someone working a 40-hour week, that's an annual salary of between $38,480 and $41,600.

Powell said the company had working to build capability in the retail sector for some time, and was influenced by the union-led New Zealand Living Wage campaign, which flagged the need for an increase in the country's minimum wage to address the growing income gap between rich and poor.

"We took account of the analysis done by the Living Wage campaign, which the First Union took part in, regarding the level of career pay rates required to reasonably support a household," he said.

The First Union welcomed the news as they prepare to negotiate their collective agreement in July, having accepted what it called a lower wage rise than justified last year when the company was in a turnaround phase.

"At that time the Warehouse CEO Mark Powell promised the workers and their union that the company would look at significant wage increases after the turnaround had been completed," First Union retail secretary Maxine Gay said. "We are pleased to see that Mark Powell is a man of his word."

Warehouse shares rose 1.2 percent to $4.10 yesterday, and have climbed 35 percent this year. The stock is rated an average 'hold' based on six analyst recommendations compiled by Reuters, with a median target price of $3.675.

The government re-introduced a youth minimum wage last month in a bid to fuel employment growth for young New Zealanders struggling to get a toehold in the workforce. It increased the minimum wage to $13.75 an hour in February.

Government figures today are expected to show private sector wages grew 1 percent in the first three months of the year, according to a Reuters survey of economists. The average private sector wage was $25.17 an hour, according to the December quarter employment survey.

BusinessDesk.co.nz

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