Costa joins Starbucks in increasing pay levels

Coffee chain Costa has outlined its plans to hike pay as rival Starbucks announced that thousands of its staff will also receive wage increases.

Costa is going to pay its baristas a minimum of 7:40 an hour from next month. Picture: Dan Phillips

Costa said that from next month, the vast majority of its baristas will earn a minimum of £7:40 an hour, and £8:40 an hour in London. The new rates of pay will also apply to staff members aged under 25 years old.

Starbucks has also unveiled plans to extend the national living wage to all of its workers, including those aged under 25. It will increase its basic pay to £7.20 per hour in April 2016 for all employees, including apprentices and more than 4,500 members of staff who are under 25. Supervisor pay will increase to £8.72 per hour and Starbucks will also pay a “London premium” for those working in the capital.

Starbucks will also offer loans for tenancy deposits to help its employees, particularly those under the age of 25, “tackle the cost of living”.

Chris Rogers, managing director of Costa, said that the chain wrote to staff last week to tell them about plans to increase pay.

Mr Rogers said: “For some months we have been planning to increase the pay of our 12,000 baristas and last week wrote individually to them all with the news that they will be getting a pay rise from 1 October 2015.

“So from next month the vast majority of our baristas will earn a minimum of £7:40 per hour and £8:40 for those in London.

“Our new rates of pay apply to all Costa team members including those under 25 years old. Our people are the heart of our business and we’re committed to investing in them through higher rates of pay, training, job creation and apprenticeships.”

The national living wage announced by Chancellor George Osborne in his summer budget will see all workers aged 25 and over paid £7:20 an hour from next April, rising to £9 from 2020. Those aged under 25 are subject to the national minimum wage, which from 1 October will pay those 21 and over £6:70 an hour, 18 to 20s £5:30 and under 18s £3:87, while apprentices must be paid a minimum of £3:30.

Starbucks said about 7,000 employees who have worked in company-owned stores for more than a year will be eligible for the Home Sweet Loan scheme, originally developed by the homelessness charity Shelter. The company will lend workers a maximum of one month’s wages to be repaid interest-free over 12 months to help pay the rental deposit when moving home, with each application considered on a case-by-case basis.

Starbucks, which has come under fire for the amount of tax it pays and faced a related customer boycott, has declined to say how much the initiatives would cost but confirmed there would be no price increases.