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Tesco pleases Cameron by creating 20,000 jobs to revive sluggish sales

Tesco will shrug off criticism of its role in the Government's "workfare" scheme today by creating 20,000 jobs as it attempts to revive sluggish sales and tighten its grip on Britain's shopping basket.

Britain's biggest supermarket chain will flood its 2,175 stores with the new staff at busy times to improve customer service and concentrate the £67bn-a-year business on fresh food.

The announcement was warmly welcomed by the Government. David Cameron said: "This is a massive confidence boost for the UK economy.

"Tesco is one of the world's leading companies and the biggest private-sector employer in this country. Their commitment to creating jobs and opportunities for young people at what is a difficult time for the economy is fan- tastic news for the UK as a whole and for those people they will help into work."

The move comes at a particularly testing time for the grocery chain.

In January, after 11 months in the job, Tesco's new chief executive, Philip Clarke, disclosed that like-for-like sales had slipped 1.3 per cent over the Christmas period, as it lost out to rivals who invested more in promotions.

Explaining that profit warning, its first for 20 years, Mr Clarke took an apparent swipe at his predecessor, Sir Terry Leahy, by suggesting that Tesco – which has expanded rapidly overseas in recent years in the US and Asia – had not invested enough in its British business.

"We've been running the stores a bit hot for a while and we need to invest back in people in the stores and product in the stores," he said.

Tesco has recently come under fire for taking part in a government scheme which removed the benefits of the young unemployed if they failed to complete a month of unpaid work experience. Following "slave labour" protests at its stores, Tesco said it would pay the workers and give jobs to all those who successfully completed their month.

Announcing the new jobs programme, which would be rolled out over two years beginning immediately , Tesco said it would "invest significantly" in additional staff hours and training to improve customer experience, particularly on fresh produce and counter services, which it said shoppers most valued.

The company suggested that most of the jobs would go to the young unemployed.