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Grocery execs say there was no coordination on pandemic pay cuts

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Top executives from Loblaw, Sobeys and Metro told a House of Commons committee on Friday that the decisions to cancel pandemic pay raises were made independently, despite the fact the changes occurred on the same day.

Loblaw president Sarah Davis, Metro chief executive Eric La Fleche, and Michael Medline, the chief executive of Sobeys parent company Empire, appeared before the Standing Committee on Industry, Science and Technology on Friday. Loblaw (L.TO), Metro (MRU.TO) and Empire (EMP) ended the temporary $2 per hour pandemic pay raise provided to frontline workers through the coronavirus pandemic on the same day, June 13.

While the three executives each said they did not coordinate or collaborate on the cancellation of the pandemic pay raises, Davis said that Loblaw sent “a courtesy email” to Walmart, Save on Foods, and Metro, notifying the competitors of the decision. She said she sent the email after informing Loblaw’s 200,000 employees that the temporary pay raise would be ending, as she considered the information to be then public.

“It was a courtesy to let them know that we had made that decision,” Davis said.

“We were working through a global pandemic. We had many conversations about the issues we were dealing with in our stores, through the Retail Council of Canada, and I had made the decision independent of them.”

The three chains implemented a $2 per hour pay raise for frontline workers in March, when grocery demand was surging amid the coronavirus pandemic and many customers were engaged in panic buying.

Davis said the goal of Loblaw’s temporary pay premium was not about safety but was implemented to “recognize the extraordinary efforts of our people at the height of the pandemic.” When demand had decreased and store activity had “stabilized into a new normal routine”, Davis said the decision was made to remove the pay increase.

“It's been suggested that our industry, perhaps our industry alone, should continue with premium pay. This is at least in part because people think we have outsized profits from COVID-19, and this is a false assumption,” Davis said in her opening statements, adding that increased operating costs would offset benefits from higher sales in the early days of the pandemic.

“Quite simply, we have not been putting profit ahead of our people.”

Empire chief executive Michael Medline said the company decided to end its pay raise when the government-imposed lockdowns were eased.

“Of course we watched what other retailers were doing, every good business does the same,” Medline said.

“We did not collaborate or coordinate with our competitors. We would never do that. Let me absolutely clear: we did not coordinate our decisions with other retailers.”

La Fleche said he had reached out to Medline and Davis to ask about whether or not they would maintain the temporary pandemic pay raise, but both did not confirm a final decision. Still, he said Metro’s decision to stop the pay increase was made independently.

“We made the decision to end the temporary wage premium independently and in response to the gradual return to normal customer shopping behaviour and business volume following the surge we experienced from March to May,” he said.

Medline also called out the committee for not asking other grocery retailers that did not offer hero pay or ended the pandemic pay on an earlier date to appear on Friday.

“I’m disappointed that Loblaw, Metro and Empire, three Canadian companies that continued their bonus programs longer than almost any other in the industry are the only companies being invited to speak with you on this issue,” Medline said.

“Let’s remember that in Canada, our three major grocers compete against two of the largest American corporations in the world, one online and one omni-channel,” he continued, alluding to Walmart and Amazon.

“I’m interested that they are not being called to this committee as their programs ended, long before ours.”

Walmart Canada had also introduced a pandemic pay raise, and returned wages to normal levels before Loblaw, Sobeys and Metro did.

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