High inflation has forced companies to raise salaries
Many companies nowadays are resorting to laying off employees due to the rising cost of running their businesses "thanks" to high inflation. However, some have gone the other way, showing empathy for the increased costs of their employees, and have started to increase salaries. Which companies are we talking about and how does this affect their actions?
Stellantis
The first company we'll look at is the car company Stellantis. The latter has decided to sign an agreement with the unions in Italy for a 6.5% salary increase. The increase is valid for their Italian subsidiaries. The reason is clear, their employees are facing soaring inflation. The company will also proceed with a further increase from January next year when wages will rise by a further 4.5%.
It seems that the car company really cares about the satisfaction of their employees, as they have also approved a one-off bonus of a total of €600 including benefits, which will be paid out in three phases this year. The increase will be enjoyed by nearly 70,000 workers at Stellantis, Ferrari, Iveco and CNH Industrial, previously part of the Fiat group, and is the result of negotiations that began at the end of October.
Stellantis confirmed in a separate statement that the total wage increase for its Italian employees will be more than 11% in the first two years covered by the four-year agreement signed on Wednesday. The aim of each company should be to find solutions that protect the interests of employees and the company in terms of competitiveness.
However, we are seeing this phenomenon all over the world, as employees of the car companies are demanding wage increases on a global scale, so that they can mitigate the impact of inflation. Stellantis could raise salaries not only in Italy, but also in France, as their brands include Peugeot and Citroen, which offered its French employees a 5.3% pay rise in December.
If we look at Europe, inflation has reached above 20% in some countries. In Italy, inflation reached an average of 8.7% during 2022, and in the second half of the year it exceeded the 10% mark. The value of the company's shares has risen by an average of 12% over the last month.*
Performance of Stellantis NV shares over the last 5 years. (Source: Investing)
Tesco
The British supermarket chain has also stepped up on pay rises. Hourly pay for staff in stores is being increased by 72p, from £10.30 to £11.02. This is the third pay rise in the last 10 months, which has cost Tesco more than £230m. Tesco boasts a total investment in hourly pay of a record £450 million over the past year. The value of the shares has risen by almost 7% in the last month.*
Tesco PLC's share performance over the last 5 years. (Source: Investing)
* Past performance is no guarantee of future results.
The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data. Past performance is no guarantee of future results.
