A group of major investors, including the investment arms of Aviva PLC (LSE:AV.) and Legal & General Group PLC (LSE:LGEN), are calling for businesses to protect vulnerable workers amid the cost-of-living crisis with pay rises at least in line with inflation.

A statement from the group urged businesses to ensure their lowest-paid workers are “adequately targeted” in pay awards that meet the current rate of inflation.

With UK consumer price inflation easing to 10.4% in the most recent update from the Office for National Statistics, with wage increases nearer 6% as real-terms pay has declined for more than 15 months in a row, the longest pay squeeze in more than 200 years, and is set to continue. 

Corporations are also being asked to commit to paying the real living wage to all employees across supply chains, including third-party contracted staff on a long-term basis (the real living wage is £10.90 an hour for the UK and £11.95 in London).

The letter, which has been signed by Aviva Investors, the Joseph Roundtree Foundation, Legal and General Investment Management, Nest, PensionBee, PIRC, Rathbones Greenbank Investment, among others in ShareAction's Good Work Coalition, also calls for companies to provide secure work through “guaranteed working hours and fair and accurate contracts”.

ShareAction will be attending the annual shareholder meetings of companies such as Deliveroo PLC (LSE:ROO), J Sainsbury PLC (LSE:SBRY), Tesco PLC (LSE:TSCO), Next PLC (LSE:NXT) and JD Sports Fashion PLC (LSE:JD.) on behalf of the coalition to push the companies to “address inequality in a cost-of-living crisis through fair remuneration policies,” it said.

The activist investment group will also write to these and other companies about these issues ahead of their AGMs and “will be looking for evidence that are taking action on these issues.”

There has been some appetite to use votes on remuneration reports to express dissatisfaction with company approaches to pay, as seen with Sainsbury's last year, though a large majority of shareholders voted against the AGM proposal, but in the context of the cost-of-living crisis is expects to see an increase in such votes this year.

“Where companies do not meet the expectations we have set out, we may recommend that investors vote against remuneration reports and send a clear signal to the board,” the spokesman said.

Aviva Investors impact analyst Vaidahee Sachdev said companies needed to “balance the interests of all stakeholders”, particularly paying attention to “protecting the most vulnerable parts of their direct and indirect workforce and consumer base”.

He noted that as well as businesses supplying essential goods, their “actions today will be instrumental in determining levels of prosperity tomorrow”.

In the longer term, he said, “we as investors must play our part in holding companies to account where short-termism exacerbates long-term systemic risks such as inequality”.

Aviva has £232bn of assets under management.

Marie Payne, responsible investment officer at ACTIAM, said the provision of a living wage is “part of a company’s social license to operate” and this “matters even more in the current context of a cost-of-living crisis”.