Cantillon: Ikea puts pay rise together for Dublin staff

Anyone who has ever spent an afternoon trying to assemble an Ikea flatpack will welcome the giant retailer’s decision to pay its 413 staff in Dublin a “living wage” of €11.50 per hour. The assumption might have been, of course, that the company was already paying that kind of a wage to its hard-working staff.

As a statement from the group attests, Ikea has 330 stores in 28 countries. Worldwide, the group had 771 million store visits in its last financial year. Its big foot is no less popular in Dublin. Accounts for Ikea Ireland, which runs its Ballymun store, point to a rise in sales and profits.

Turnover advanced to €131.96 million the year to August 2015 from €112.78 million. In the same period pretax profit rose to €13.17 million from €7.15 million. That’s a profit of more than €1 million per month. At the end of the last financial year the Irish unit held €28.19 million in retained profits.

It follows that the enterprise is not exactly struggling. So the move to pay a “living wage” from April 1st is something it can sustain – and might have sustained long ago too.

Never averse to corporate guff, Ikea says this endeavour is in keeping with a “a wider transformation of basic co-worker conditions”. It wants ensure the “co-worker” has the right level of pay, the right contract and an appropriate schedule. This is cast as a virtue. But it also raises questions about the pay, contracts and schedules which prevailed until now, questions the customer might not contemplate in the cheerful glow of feel-good advertising, smart-looking product and ever-helpful staff.

There’s self-interest here for Ikea, which argues that the “living wage” makes commercial sense. “It is vital to the ongoing success and sustainability of the business that we retain co-workers as well as attract the top talent in the local market place,” the firm says.

Needless to say, concerns around retention and recruitment are not to the fore when the wider jobs market is contracting.