STOCKHOLM – IKEA store owner Ingka Group has extended the period in which it will pay about 12,000 employees in Russia for three months, until August, and may continue to pay workers after 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 pause procurement in Russia, citing supply chain disruption and challenging trade conditions due to Russia’s invasion of Ukraine. It was then said that all affected staff would be paid, in rubles, at least until May.
“We managed to extend it to six months,” Ingka’s retail manager Tolga Oncu told Reuters. “We continue to monitor, analyze, watch what is happening and we will make decisions as we move forward.”
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The flood of Western companies has halted business in Russia due to its invasion of Ukraine and the resulting sanctions against Moscow, and a growing number of companies are announcing they will leave the country indefinitely.
Companies, including McDonalds and Renault, have said they will continue to pay staff in Russia for now.
Russia has warned it could nationalize foreign companies that have suspended operations in the country.
IKEA operates through a franchise system with Ingka, which is the main recipient of the Inter IKEA franchise, which is also in charge of supply and employs 2,500 in three factories in Russia.
Ingka, also one of the world’s largest shopping mall owners, has so far kept its 14 shopping malls in Russia open under the name “MEGA”.
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Onca declined to give details of where the money to pay local salaries will come from. “We respect all sanctions. We use the property we have (in Russia),” he said.
Oncu also declined to say whether the furniture dealer was considering leaving Russia altogether.
Ingka has 17 stores in Russia and one distribution center. In the last fiscal year, Russia was its 10th largest market with retail sales of 1.6 billion euros, or 4% of total retail sales.
The obligation to extend the salary for another three months affects Ingka staff, not Inter IKEA staff, an Ingka spokesman said. Some employees are assigned to work with the return of goods, and maintenance of warehouses and systems.
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Russia calls its actions in Ukraine a “special operation”.