Amazon has announced an above-inflation pay rise for tens of thousands of its frontline workers across the UK, in a move likely to intensify debate over wage costs in the retail and logistics sector.

From the end of this month, the minimum starting pay will rise by 5.9% to £14.30 per hour, or by 5.5% to £15.30 depending on location. This means annual salaries for warehouse and delivery staff will start at £29,744 and rise to £31,824 in areas with higher living costs.

The online retail giant said its latest increase means minimum pay at Amazon has risen by 43% since 2022, reflecting its efforts to attract and retain staff in a competitive labour market.

John Boumphrey, Amazon’s UK country manager, said: “Our UK frontline employees are essential to our success, which is why we’re proud to increase our minimum starting wage to £29,744 a year. Beyond this competitive wage, we offer industry-leading benefits from day one and meaningful career development opportunities for all our employees.”

For entrepreneurs, the move is a reminder of how large employers can set benchmarks that ripple through the labour market. Small and medium-sized firms may find it harder to compete with the pay and benefits offered by global companies like Amazon, especially at a time when higher national insurance contributions, business rates and other costs are already squeezing margins.

At the same time, the decision underscores the importance of investing in workforce retention. Rising wages across the economy reflect both inflationary pressures and employee expectations around pay security, training and progression. Businesses of all sizes are increasingly expected to balance competitive pay with sustainable business models, making efficiency and innovation crucial.

Amazon’s announcement is likely to increase calls for other large retailers and logistics firms to match the pay hike. For smaller businesses, it may also accelerate the need to differentiate on culture, flexibility and customer focus rather than competing solely on wage levels.