Ikea Raising Minimum Wage for U.S. Workers

Ikea Group the largest furniture retailer in the world will raise its minimum wage per hour it pays employees in the United States by 10%. That will make the rate $11.87 in an attempt to keep employees from leaving to work for other merchants that have increased pay recently.

The pay increase, which will take effect on January 1, follows an increase of 17% this year to its current $10.76 per hour. The raise in 2016 will affect 32% of the hourly Ikea retail staff, along with certain workers in the area of distribution, said the company on Wednesday.

Many retailers in the U.S. have boosted pay to keep their workers in a labor market that is becoming increasingly more tight and to respond to pressure from politicians and labor groups.

Walmart raised the minimum wage its pays its employees in April to $9 and said that would be bumped up to $10 during February of 2016. TJX Cos, which is the parent company for Marshalls and T.J. Maxx, two discount retailers, announced a move that was similar which takes effect before the end of this month. Ross Stores and Target have also increased pay during 2015.

Every year the wage structure is reviewed said Ikea’s U.S. unit’s CFO Rob Olson adding that it is not a question of being the leader, but doing what is right for co-workers.

In a statement, Ikea said the increase had been prompted by a tool used to calculate wage rates known as the MIT Living Wage Calculator. The company considers the local competition along with the regulations for minimum wage in the different locations of each of its stores.

The wage increase this year has helped the U.S. unit of Ikea reduce its turnover of staff by over 5% for its fiscal 2015.

It has also helped to increase the store sales and attract job applicants who are stronger, said Ikea.

The next hike in pay is expected to reduce turnover even further, a trend that Ikea says helps the business save in costs for recruitment and training.