Sainsbury’s is increasing hourly pay by more than 12% for grocery delivery drivers and more than 5% for its lowest paid shop workers as staff shortages continue to affect British businesses. Basic pay for shop workers, at Sainsbury’s supermarkets and the Argos catalogue chain, will rise to a minimum of £10 an hour from the current £9.50 from 6 March. The company said the change would cost £100m. Grocery delivery drivers’ pay will rise to £11.50 an hour, including a 75p premium on top of a 75p booster already being paid. Argos drivers will receive an extra 25p an hour on top of basic pay in addition to a 75p existing supplement, taking their total to £11 an hour. Sainsbury’s staff will also get a 15% discount in stores for five days around each payday. Argos, Sainsbury’s and Habitat staff will continue to get a 10% discount at other times. The new rates of pay exceed the legal minimum wage for people aged 25 and older, which rises from £8.91 to £9.50 an hour from April. Dave Gill, the national officer at the Usdaw union, welcomed the increase after lengthy negotiations. “It’s been a tough time for food retail staff who have worked throughout the pandemic in difficult circumstances … they deserve decent pay and this offer is a welcome boost,” he said. Sainsbury’s is being forced to act as retailers and other businesses battle for staff amid widespread shortages that are driving up wages and the price of goods. Some companies, including Tesco and Asda, have been offering qualified lorry drivers signing-on bonuses of £1,000 or more. But shortages extend to warehouse staff and van drivers, while shops are also under pressure as the spread of the Omicron Covid variant has forced millions to take time off. Greggs bakery chain said on Thursday that it had brought forward pay rises for workers by five months so they were received before Christmas amid “continued disruption to staffing and supply chains”. The company also said it had put up the price of its baked goods by 5-10p each because of increased costs including wages. Next said it was also having to put up the price of its clothing by as much as 6% this autumn as the fashion and homewares retailer expected average wages to rise by more than 5% this year. Lidl announced in November that it would increase minimum pay from £9.50 to £10.10 an hour outside of London, a more than 6% increase, from March and £10.85 to £11.30 within the M25. Workers at the discounter can earn up to £12.25 an hour in London depending on length of service. However, last month that was topped by Aldi, which said it will increase minimum hourly rates for shop workers to £10.57 an hour from £9.55 nationally from February, a near 11% rise, and £11.32 in Greater London from £11.07. Aldi is one of the few retailers to continue to pay staff for break times, making its overall pay deal even more generous. Simon Roberts, the chief executive of Sainsbury’s, said: “We are making this significant investment to show our colleagues how much we value the brilliant job they do for our customers every day. It also reflects the significant progress we are making against our plan and to save money we can invest in lower prices, offer fantastic colleague service and make shopping convenient for customers.”