IKEA store owner Ingka Group has extended the period in which it will pay around 12,000 employees in Russia for three months, through August, and may continue to pay workers beyond that, its retail manager said in an interview. .
The world’s largest furniture brand said in early March that it would temporarily close stores and halt sourcing in Russia, citing supply chain disruption and difficult trading conditions due to Russia’s invasion of Ukraine.
At the time, he said all affected staff would be paid, in rubles, at least until May.
“We have managed to extend that to six months,” Ingka’s retail manager Tolga Oncu told Reuters. “We’re still monitoring, analyzing, looking at what’s going on and we’ll make decisions as we go.”
A spate of Western companies has halted operations in Russia due to the invasion of Ukraine and resulting sanctions against Moscow, and a growing number of companies have signaled they will leave the country indefinitely.
Companies such as McDonald’s and Renault have said they will continue to pay staff in Russia for the time being.
Russia has warned that it may nationalize foreign companies that have shelved their operations in the country.
IKEA operates through a franchise system with Ingka as the main Inter IKEA franchisee, who is also in charge of supply and in Russia employs 2,500 people in three factories.
Ingka, also one of the world’s largest mall owners, has so far kept its 14 malls open in Russia, under the ‘MEGA’ brand.
Oncu refused to give details about the origin of the money to pay local salaries. “We comply with all sanctions. We are using the assets that we have (in Russia),” he said.
Oncu also declined to say whether the furniture retailer was considering leaving Russia altogether.
Ingka has 17 stores in Russia and one 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.
The commitment to extend the payment for another three months affects Ingka staff and not Inter IKEA staff, an Ingka spokesman said.
Some employees have been reassigned to work with merchandise returns and store, warehouse and system maintenance.
Russia calls its actions in Ukraine a “special operation.”