It was a hurrah time for the employees of Swedish furniture retailer IKEA, as the company on Thursday morning announced hike in its base salary.
IKEA, which is one of the major retailers in the United States, announced to give a boost to its base salary, saying the size of the increase will vary from state to state.
According to the company officials, the new wage structure will take effect from January 1, 2015. With the new salary structure, the American employees are expected to get an increase pay of about 50 percent.
Rob Olson, acting president and CFO for IKEA US, said that the policy change “goes back to the IKEA vision, which is to create a better everyday life for the many people.”
“We had always focused on making sure we were above average with our compensation rates, so whatever the average of our competitive set was, we wanted to be higher than that,” Olson said while adding, “Now we’ve said, let’s not worry about where the competition is, let’s worry about where the co-worker is.”
Another major retailer Gap Inc. earlier in February has revamped its wage structure by increasing its nationwide base pay from USD 9 to USD 10.
Calling such moves by the companies as ‘a big step forward’, Demos senior policy analyst Amy Traub said, “I predict that we’ll see more companies stepping forward to raise wages, as well as pressure continuing to mount for cities, states and federal government to raise the minimum wage across the board.”
The new IKEA policy will base entry-level compensation on the MIT Living Wage Calculator, which bases its estimates on family size as well as region.
IKEA, however, said its minimum hourly wage at all locations would be pegged to the cost living for a single, childless adult.
“It means working parents are likely to find their new compensation structure “to be very welcome, but it won’t be a living wage,” Traub said.
Jack Temple, policy analyst for the National Employment Law Project, said, “Company wage increases make a massive difference for employees.”
“But he says they can’t make up for a lack of federal action,” he added.