IKEA has extended the period during which it will pay roughly 15,000 employees in Russia by three months, until August, and may continue to do so after that.
Early in March, the world’s largest furniture company announced that it will temporarily close stores and halt sourcing in Russia, citing supply chain disruption and difficult trading conditions as reasons. It claimed at the time that all affected employees will be paid in roubles at least until May.
“We have managed to prolong that to six months,” Tolga Oncu at IKEA stores owner Ingka Group told Reuters in an interview. “We keep monitoring, analyzing, looking at what’s happening and will make decisions as we go forward.”
Due to Russia’s invasion of Ukraine and the resulting sanctions, several Western corporations have halted operations in the nation, and an increasing number have said that they will leave the country indefinitely.
McDonald’s and Renault (EPA:RENA) have stated that they will continue to pay their employees in Russia for the time being.
Russia has threatened to nationalize foreign companies that have put their activities on hold in the country.
IKEA operates through a franchise structure, with Ingka serving as the primary franchisee for Inter IKEA, which is also responsible for supplies and employs 2,500 people in three factories in Russia.
Ingka, one of the world’s largest shopping mall operators, has maintained its 14 “MEGA” malls running in Russia so far.
Oncu refused to say where the funds for paying local wages would come from. “We comply with all the sanctions. We are utilizing the assets that we have (in Russia),” he said.
Oncu also refused to clarify if the furniture store was considering pulling out of Russia entirely.
Ingka has 17 outlets and one distribution center in Russia. Russia was the company’s tenth-largest market in the previous fiscal year, accounting for 1.6 billion euros in retail sales, or 4% of total retail sales.
According to an Inter IKEA spokeswoman, the commitment to extend pay for another three months impacts both Ingka and Inter IKEA employees.
Some Ingka staff have been relocated to store, warehouse, and system maintenance.
Russia’s efforts in Ukraine are described as a “special operation.”
