Smiths City Group will make sure its 541 workers are all earning at least the living wage from October and will let employees use a day of sick leave every year for their own well-being as the retailer works harder to get onside with its staff.

This announcement comes after the retailer found itself at odds with some sales staff over attending 15-minute 'voluntary' morning meetings and was ordered to reimburse underpaid employees for six years of back pay. Smiths City accepted the ruling and took a $1.5 million provision to cover the bill in its latest accounts.

The Christchurch-based company marked its 100th anniversary with the new initiatives and said it will also give all staff an extra day of annual leave this calendar year. The new pay rates won't have a material impact on Smiths City's earnings and the retailer isn't committing to automatically keeping pace with future increases in the living wage estimate, which it said it will have to gauge against the business climate and capital needs.

The company spent $32.4 million on its wage bill in the April 2017 year, implying an average salary of about $54,812, which equates to an hourly wage of $26.36 based on a 40-hour week. The living wage is currently calculated at $20.55, or $42,744 per annum, by the New Zealand Family Centre Social Policy Unit. Government data show the average hourly earnings in retail was $21.80 as at March 30, the second lowest paid industry behind accommodation and food services and about 70 per cent of the average wage of $31.03 across all sectors.

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"We want our staff to be enthusiastic and excited about their work; to feel that they are benefitting personally from working at Smiths City; and that they are learning new skills and gaining the experience to develop an enduring and prosperous career with the organisation and in the retail sector," chief executive Roy Campbell said in a statement. "Fundamental to the development of this culture is paying Smiths City people fairly for a fair day's work."

Last month the retailer's new chair Alastair Kerr said a transformation programme to improve profitability and expand its customer base hadn't focused enough on its customers and had been too slow to adapt to a rapidly changing environment, prompting the board to suspend dividends for the current financial year.

Staff training has previously been identified as an area to improve performance and Campbell today said the retailer's success relies on its team being focused on serving customers. The introduction of the living wage and the extra holiday and introduction of an annual 'well being' day are all part of fostering that culture, he said.

The shares last traded at 39 cents and have dropped 35 per cent so far this year.

- BusinessDesk