IKEA’s Genius Plan: Pay Workers More to Keep Them

Faced with sky-high turnover, notoriously anti-union IKEA has reluctantly decided to pay workers more and offer them childcare in a tight labor market. To rebalance power between management and labor in the long term, workers need a union.

Swedish Furniture And Homewares Giant IKEA

A sign for an Ikea furniture store is seen on February 26, 2024, in Round Rock, Texas. (Brandon Bell / Getty Images)


Global retail giant IKEA was having trouble keeping its employees. It’s quit rate in the wake of the pandemic crept above 20 percent as unhappy workers — underpaid, facing unpredictable shift hours, and dealing with the misery of retail — left by the tens of thousands each year. The labor losses hit the furniture giant hard.

As Matthew Boyle reports for Bloomberg, each departure cost the company $5,000, the cost of hiring someone new, which incentivized IKEA to do something about their worker retention problem. One would hope that the misery suffered by its employees would be a good reason to improve their lot, but, alas, that wasn’t enough. Repeated hits to the bottom line did it, though. With sixty-two thousand workers leaving each year at five grand a pop, that’s a lot of meatballs — $310 million worth, in fact.

IKEA’s solution was to pay some of its workers better and offer better working conditions with more predictable shifts and benefits that include subsidized childcare. It’s like a doctor telling you about a miracle cure to your nasty bacterial infection: antibiotics. That is to say that the solution was to adopt obvious, repeatedly proven solutions to a common problem. So why don’t we see this approach everywhere, all the time?

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