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Walmart Stores Inc, which has been criticized for its low employee benefits and wages, said it was going to spend over $1 million to increase the wages for more than 500,000 employees in the U.S. in 2017.
The wage increase, announced by the largest employer in the private sector in the U.S. will cover close to 40% of its workforce in the U.S., but falls short of expectations of some labor groups that were asking for more.
On Thursday, Walmart said its fulltime and part time hourly employees would earn a minimum of $9 per hour starting this April and a minimum of $10 per hour by February 1, 2016.
Labor groups, with the leader Our Walmart, have called for the retailer to pay workers a minimum of $15 per hours.
Walmart, which has close to 1.3 million workers in the U.S. had been targeted by activists in a debate over different proposals of raising the federal minimum wages that is just $7.25 per hour.
The wage increase will affect mainly the lowest paid employees in Walmart. The average per hour wage for workers who are fulltime at Walmart will increase this year from $12.85 to $13, while the average hourly wage for workers who are part time will increase from $9.48 to $10, said Walmart in a media call.
Shares at Walmart fell by as much as 3.2% in morning trading following the announcement as investors weighed in on the impact wage hikes would have over the short term on profitability. The program worth $1 billion includes changes in scheduling and staff training to help the employees advance in their careers.
The largest retailer in the world reported a profit that was better than had been expected for the fourth quarter as shoppers spent extra savings thanks to gas prices being lower in the U.S. Sales at same stores in the U.S. were up 1.5% compared to Wall Street expectations of just 0.7%.