Aldi has increased wages for shop floor workers for the second time in a year in the latest sign of fierce competition among UK workers.

The grocery discounter is due to increase hourly pay by 40p to a minimum of £10.50 outside the M25 and £11.95 in London from September, an increase of at least 3.5%.

Unlike most other supermarkets, the rate also covers shift break pay, which the company says costs £830 a year for the average store worker.

The move comes as supermarkets compete for staff with other high street, travel and hospitality businesses hiring after the easing of pandemic restrictions in a labor market where supply has been tight Brexit restrictions on work visas.

Tesco and sandwich chain Pret a Manger has both paid employees twice for the past year while Asda increased the pay to £10.10 an hour in July unions criticized it for lagging behind rival networks with the £9.66 rate introduced in April.

Hospitality businesses, including restaurants and hotels, are also forced to increase wages and, in some cases, limit working hours. because it is difficult for them to find a sufficient number of workers with appropriate qualifications to handle the surge in demand.

Aldi is particularly in need of more recruits to staff its new stores as it competes with German discounter Lidl to become Britain’s fastest-growing grocery chain. Both are thriving as shoppers shift at least some of their spending away from traditional supermarkets in an effort to cut costs amid soaring food prices.

Giles Hurley, chief executive of Aldi in the UK and Ireland, said: “Our new pay rates maintain Aldi’s position as the UK’s highest paying supermarket.

“This announcement recognizes the amazing contributions our colleagues make in serving local communities across the country. Their outstanding efforts have ensured that our customers continue to have access to fresh, affordable food every day.”

The new rates at Aldi, which is now the UK’s fifth biggest supermarket and is poised to overtake Morrisons for 4th place, are above the Living Wage Fund’s current £9.90 an hour recommended nationally and £11.05 in the M25.

All major supermarkets, including Tesco, Sainsbury’s, Morrisons, Asda and Lidl, now pay above the independently verified Living Wage. However, none of them are accredited to the scheme, which requires them to ensure that all contractors, such as security guards and cleaners, are also paid a living wage.

Campaigners tried to get Sainsbury’s to sign up to the scheme with a movement of shareholders at the annual meeting earlier this month, but didn’t get enough investor support for the move.

The real living wage is expected to rise significantly in October when the independent body publishes its new guidance a month earlier than usual.

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