IKEA store owner Ingka to pay Russian staff until August

Customers shop at the IKEA store in Omsk, Russia, March 3, 2022. REUTERS/REUTERS PHOTOGRAPHER

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STOCKHOLM, May 8 (Reuters) – IKEA store owner Ingka Group has extended by three months, until August, the period during which it will pay around 12,000 employees in Russia and may continue to pay workers beyond. of that period, its retail manager said in an interview.

In early March, the world’s biggest furniture brand announced it would temporarily close stores and suspend supplies in Russia, citing supply chain disruption and tough trading conditions due to the invasion of Russia. Ukraine by Russia. At that time, he said that all relevant staff would be paid, in rubles, at least until May. Read more

“We managed to extend that to six months,” Ingka retail director Tolga Oncu told Reuters. “We continue to monitor, analyze, watch what is happening and we will make decisions as we go.”

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A flood of Western companies suspended operations in Russia due to its invasion of Ukraine and the resulting sanctions against Moscow, and a growing number of companies signaled that they would leave the country indefinitely. Read more

Companies such as McDonalds (MCD.N) and Renault (RENA.PA) said they would continue to pay staff in Russia for the time being.

Russia has warned it may nationalize foreign companies that have suspended operations in the country.

IKEA operates through a franchise system with Ingka the main franchisee of Inter IKEA, which is also in charge of sourcing and in Russia employs 2,500 people in three factories.

Ingka, also one of the largest mall owners in the world, has so far kept its 14 malls in Russia, under the “MEGA” brand, open.

Oncu declined to give details of where the money came from to pay local salaries. “We respect all sanctions. We use the assets we have (in Russia),” he said.

Oncu also declined to say whether the furniture retailer plans to leave Russia altogether.

Ingka has 17 stores in Russia and a distribution center. In its last fiscal year, Russia was its 10th largest market with retail sales of €1.6 billion, or 4% of total retail sales. Read more

The commitment to extend pay for another three months affects Ingka staff and not Inter IKEA staff, an Ingka spokesperson said. Some employees have been reassigned to work with merchandise returns and maintenance of stores, warehouses and systems.

Russia calls its actions in Ukraine a “special operation”. Read more

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Reporting by Anna Ringstrom; Editing by Matt Scuffham, Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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