Walmart plans to hike wages of 500,000 workers

The company also unveiled a training and education program that will allow employees to earn a high school degree at no cost as well as pursue higher education at more affordable prices. The moves addressed mounting criticism by labor unions and other groups that the company's low wages have locked workers into poverty and pressured some of them to seek public assistance to make ends meet.

President Barack Obama has also made the issue of low pay and a growing income gap across the country a key focus of his economic policy. In a video address to employees, Wal-Mart Stores chief executive Doug McMillon acknowledged that "sometimes we don't get it all right." "As a team, we really wanted to demonstrate this year that we really care about you as associates and appreciate the work you do every day," said McMillon.

Labor and social activists have been building pressure on the retail giant for several years, mustering protests and mostly small worker walkouts at the stores, especially around the late November Thanksgiving weekend, when holiday shopping surges.Last year a coalition of progressive and pro-labor groups, American for Tax Fairness, issued a report claiming that the government provides $6.2 billion a year in poverty-based assistance to Walmart workers because of their low wages.

The group also attacked the tax benefits earned by the family which controls Walmart, the Waltons, called the world's wealthiest family by Forbes with a $152 billion fortune. The move came as the federal government and a number of states have increased their minimum wages over the past couple years to address what economists say is a growing gap between what the average and wealthiest American households earn.

As of January, 29 states plus the District of Columbia have minimum wages above the federal minimum, according to the National Conference of State Legislature. Four states, including Walmart home-state Arkansas, enacted wage hikes in ballot measures in 2014, while 12 other jurisdictions raised wages through the legislature, the NCSL said.

The National Retail Federation, a leading trade group, said Walmart's decision reflected the power of the marketplace as it took a swipe at policies such as government mandates to hike wages. "Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate," it said

"Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery." Yahoo chief executive and Walmart board member Marissa Mayer praised the move on Twitter. "So happy for Walmart associates and proud of Walmart management," Mayer said. "A great leadership decision by Doug McMillon."

Walmart said the increased spending on wages and education would weigh on future profits. The new program will shave 20 cents per share from earnings in fiscal 2016.Walmart projected fiscal 2015 earnings of $4.70-$5.05 a share compared with the $5.19 expected by analysts.

In early trade Thursday Walmart shares fell 2.6 per cent to $84.05.