LONDON (Reuters) - Sainsbury's, Britain's second largest supermarket group and one of the country's biggest private sector employers, will raise the basic hourly pay of its store workers to at least 10 pounds ($13.55) an hour from 9.50 pounds previously.
The group said on Friday the rate will increase to 11.05 pounds from 10.10 pounds for workers in inner London and to 10.50 pounds from 9.75 pounds in outer London.
The rise also covers workers in the group's Argos general merchandise business.
The Bank of England is keeping a close eye on wage settlements as it ponders whether to raise interest rates again.
Sainsbury's said it was also increasing additional payment rates for drivers - a sector which is facing an acute shortage.
Groceries Online drivers will now get 11.50 pounds per hour, with a basic rate of 10 pounds per hour plus an extra 1.50 pounds per hour.
Argos Fast Track Delivery drivers will receive 11 pounds per hour based on a base rate of 10 pounds per hour plus an extra 1 pound, up from 75 pence.
"While demand for online deliveries remains high, this enhanced pay will help the retailer recruit and retain the best talent," Sainsbury's said.
It said the new rates of pay exceed the government mandated National Living Wage and the National Real Living Wage and represent a 100 million pound investment from Sainsbury’s in its staff.
The pay increases will come into effect from March.
Last year Morrisons, Britain's No. 4 supermarket player, said it became the first British supermarket group to pay all its store staff at least 10 pounds an hour.
($1 = 0.7382 pounds)
(Reporting by James Davey. Editing by Andrew MacAskill)