IKEA hikes pay in UK after raising wages in US

Luke Graham, special to CNBC

Furniture retailer IKEA has promised to pay its U.K. workforce the "living wage," as the drive for businesses to push pay beyond the minimum gains traction in Britain.

U.K. employees of the Swedish company will receive £7.85 ($12.22) per hour, or £9.15 per hour in London, from April 2016. This compares to a national minimum wage of £6.70 per hour from October this year.

According to IKEA on Monday, more than 50 percent of its 9,000 workers in the country will see their wages lifted. The company joins around 1,600 other businesses in opting to pay the living wage, which is set by the Living Wage Foundation and is calculated according to the cost of living.

Ikea raises their minimum wage

The move comes a month after the company agreed to raise wages for its staff in the U.S. to $11.87 per hour from January 2016 – that's $4.62 more than the federal minimum wage.

In an interview with CNBC's Closing Bell at the time, IKEA's U.S. chief financial officer said raising wages benefitted the company as well as staff.

"We've seen a 5-point reduction in turnover, which of course benefits us from recruiting costs [and] from onboarding costs," Rob Olson said.

Read MoreWhy hiking wages is good for business: Ikea US CFO

Pay has been a hot topic in America for some time, and earlier this year, McDonald's workers went on protests to demand pay of $15 an hour. As a result of the "Fight for $15" campaign, New York's acting commissioner of Labor, Mario J. Musolino, decided fast food workers' wages were insufficient, and appointed a wage board to look into increasing the state's minimum wage for the fast food industry which is expected to announce its finding this week.

Other companies, including and Gap, have set pay floors above the minimum wage, while some cities have hiked minimum pay. Los Angeles, for instance, raised its minimum wage to $15 an hour in May.

A new IKEA store under construction in Florida. The furniture giant said Monday that after the three deaths of three children it is no longer selling its "Malm" series products.
Christina Mendenhall | Bloomberg | Getty Images

Now the issue appears to be making waves across the Atlantic in Britain.

Adam Marshall, executive director of external affairs and policy at the British Chambers of Commerce, said that over 60 percent of its members already paid all of their staff the living wage or more and a further 20 percent pay most staff above the living wage.

"We have always cheered individual companies able to make the decision to pay – or aspire to pay – all their staff at or above the living wage," he told CNBC.

Whether they like it or not, many other U.K.-based companies will soon be forced to raise pay, however. U.K. Chancellor George Osborne announced plans earlier this month to introduce what he called a "national living wage" for the over-25s. Employers will have to pay staff £7.20 per hour from April next year, and this will rise to £9 per hour by 2020.

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