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Fresh off $240 Million Profit Quarter, Loblaws Cuts Pandemic Pay Increase for Workers

Loblaw Companies announced that it will be ending its 15% pandemic pay increase for its temporary workers this weekend. The pay bump had been instituted by many businesses whose employees were deemed as front-line workers.

In short: The decision has been roundly criticized by unions representing grocery store workers & political leaders. Meanwhile, many have emphasized that Loblaws saw substantial financial benefits from shoppers stocking up during the recent lockdowns.

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Hazard Pay: Early in March, as the pandemic came into full swing in Canada, many front-line workers were rewarded with pay increases as a result of increased work danger.

  • Loblaws chairman Galen Weston stated that the 15% employee wage increase was “in recognition of their outstanding and ongoing efforts keeping our stores open and operating so effectively”.
  • This “hero-pay” was instituted by most large scale grocers in Canada, both as a recognition of the increased dangers especially for cashiers, as well as an incentive to avoid employees skipping work.
  • In a Globe & Mail article, a York University labour expert claimed that these pay increases also may have been necessary to stop the government from stepping in with more prolonged wage increases.

Temporary Status: The worry about these pay-bumps was that they were never meant to be permanent. Grocery store workers have been essential to ensuring Canadians have access to food during the lockdown, often putting themselves at great risks.

  • Despite the $2/hour pay increases, the majority of grocery store workers were only being paid slightly over minimum wage to perform critical work.

“Unlike so many businesses across the country right now, our supermarkets and pharmacies are performing well.

The leaders in our business wanted to make sure that a significant portion of that benefit would go straight into the pockets of the incredible people on the front line and in our distribution centres.”

Loblaws Chairman Galen Weston

Record Profits: As the Loblaws Chairman states above, the grocery industry was able to benefit from increased sales during the pandemic, as many Canadians stocked up their pantries out of uncertainty.

  • Loblaw Companies profits soared by almost 21% in the first quarter of 2020 compared to last year, an increase of $42 million.

Ending the pay-bump: Despite the huge increase in profits, in part due to employees working despite risks posed by COVID-19, Loblaws has decided to end its 15% wage increase as of this weekend.

  • This decision has quickly been met with strong criticism due to the ongoing risk which front-line workers face and the lack of financial reasons for Loblaws to cut hero-pay.

“The pandemic is not over. The danger has not passed. These workers are no less at risk and are no less essential today than they were yesterday. There is no justification for ending pandemic pay now, or ever.”

Unifor National President Jerry Dias
Federal NDP Leader Jagmeet Singh

Billionaire-class critique: Center to much of the criticism has been Loblaws chairman Galen Weston, whose newsletter to customer broke the news of the end of the pay increase.

  • Weston is one of Canada’s wealthiest individuals with a net worth of over $7 billion and likely has heavily profited from Loblaws increased pandemic sales.
  • While he decided to return the majority of his 200,000 workers back to minimum wage pay, Weston made sure to give his “heartfelt thanks to every one of our colleagues for their incredible efforts during the peak of the crisis”.

Leading the pack: There is also worry that with such a big player in Canadian business ending its pay bump, it will have a knock-on effect to other industry.

  • Following Loblaws decision, Walmart and Metro Canada have also stated they will be ending their “hero-pay” programs.

The bottom line: COVID-19 has shone a spotlight on the societal dependence many Canadians have on low paid essential employees working in places such as grocery stores, long-term care homes and food-plants. However, the temporary nature of the pay increases which they have been provided to work at increased danger levels highlights the importance of movements towards a fair living wage.

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