Britain's Sainsbury's boosts pay on shop floor

LONDON, Aug 27 (Reuters) - British supermarket chain Sainsbury (Amsterdam: SJ6.AS - news) 's will hand its 137,000 non-management store staff their highest pay increase in more than a decade this month, it said on Thursday, lifting its basic pay above the recently announced national living wage.

Sainsbury's, locked in a price war with Tesco (Xetra: 852647 - news) , Asda and Morrisons as the so-called Big Four seek to claw back shoppers lost to discounters Aldi and Lidl , will increase its basic hourly rate by 4 percent to 7.36 pounds ($11.48) from Aug. 30.

British finance minister George Osborne last month announced a compulsory living wage for workers aged over 25, starting at 7.20 pounds an hour from next April, rising to 9.35 pounds by 2020.

Sainsbury's, which axed 800 jobs earlier this year as part of a 500 million pound cost-cutting exercise to free cash for reinvestment in the business, said its new pay rate would also apply to around 40,000 staff under the age of 25.

Market leader Tesco pays an hourly rate of 7.39 pounds but, unlike Sainsbury's, it does not pay staff for breaks.

In June Sainsbury's posted a sixth straight quarter of falling underlying sales but expressed confidence that its strategy was working.

($1 = 0.6413 pounds) (Reporting by Neil Maidment; Editing by David Goodman)