LONDON, Nov 18 (Reuters) – Tesco (TSCO.L), one of Britain’s largest private sector employers, is offering its staff wage advances in the latest sign of distress stemming from a worsening cost of living crisis.

Inflation hit its highest level in 41 years, driven by rising energy bills and double-digit price hikes for foods like milk, eggs and cheese, leaving many households on low wages face tough choices this Christmas.

The labor market remains tight, however, and companies are increasing hourly wages and offering one-off bonuses to attract and retain workers.

Under Tesco’s new scheme, 280,000 of its workers will be able to receive up to 25% of their contract wages in advance if they pay a small fee.

Britain’s biggest supermarket chain said it would help staff avoid taking on costly debt with high interest payments, such as payday loans.

Many other European countries are struggling with high inflation, but Britain is the only Group of Seven country that has yet to regain its pre-pandemic size.

According to the Resolution Foundation think tank, Britain’s fifth poorest household is now more than 20% worse off than its peers in France and Germany.

With wage increases lagging behind inflation, there was a wave of industrial action across all sectors, including railways, post and telecommunications. The nurses are due to strike in the coming months.

To help staff cope as the economy flounders, some companies are offering workers extra help.

Retailer John Lewis Partnership said in September it would pay a one-time bonus of 500 pounds ($595) to full-time employees, while Marks & Spencer (MKS.L) is offering a 7.4% annual raise, a £250 voucher and benefits including free food and sanitary products.

Cleaning and property management company Mitie has offered around 60% of its 68,000 employees a “winter assistance package” that includes one-time bonuses, retail discounts and the option of future payday loans.

The country’s new monarch, King Charles, is also lending a hand, offering a £600 bonus to his staff earning less than £30,000, according to media reports.

Tesco, which has raised hourly wages by almost 8% this year, said employees would have to pay a fee of 1.49 pounds ($1.76) up front to use its scheme.

“We hope this will help support colleagues, particularly as we approach Christmas,” said James Goodman, human resources director for Tesco in the UK.

Consumer spending expert Martin Lewis says payday advances are a safer option than payday loans, but caution should be exercised.

“It’s very important to make a pact with yourself that if you do this you will only ever do it for real emergencies,” he said on his Money Saving Expert website.

“Not new shoes, not a party you want to go to. And usually not to pay your bills.”

($1 = 0.8457 pounds)

($1 = 0.8410 pounds)

Reporting by James Davey and Sarah Young, editing by Kirsten Donovan and Elaine Hardcastle

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