Politics of Low Pay (0710/14)
Here's an interesting article by Janice Turner writing in The Times which turns the spotlight on the widespread use of public money in tax credits to subsidise low paid workers in the UK.
Now this practice increased enormously under the last Labour Government and now costs a staggering £28 billion a year, but if local councils in Scotland had kept their promises to deliver equal pay back in 1999, the truth of the matter is that tens of thousands of low paid council workers would have been earning much more than £7.65 an hour for the past 15 years.
So the issue is not just one for private sector companies like Sainsbury's and if you ask me, the Labour politicians who dominated Scottish councils for so long should hang their heads in shame.
Don’t make me pay your staff, Sainsbury’s
By Janice Turner - The Times
Benefits for people in work cost the taxpayer £28 billion. But if retailers paid a living wage we could cut this bill
Since a gigantic Sainsbury is my local corner shop, I have a purseful of those coupons: “Here’s £1.45 off your next visit”, etc. But lately I’ve felt I deserve another voucher: “Here’s a tax rebate on the cash you pay our low-paid workers so they can subsist.” Surely that’s worth Nectar points?
Next time you’re in a supermarket, say hello to the nice woman on the till, high-five the young guy refilling the Basics biscuits. The chances are they couldn’t get by without you. A survey of Sainsbury employees by Unite last year found that 60 per cent relied upon government working tax credits to top up their salaries. Even so, in the previous six months, a third had resorted to borrowing money to settle their bills.
Low pay is always seen as a leftie, bleeding-heart issue. Poor oppressed workers. Aux barricades ! Rather it should raise the blood pressure of every taxpayer.
The constant conniptions of supermarkets competing for market share, discounting their rivals, fighting off the German upstarts Aldi and Lidl, distract from the fact that they are vastly wealthy. Sainsbury’s underlying profits for 2012-13 were £758 million; these have trebled in a decade.
Who could begrudge Sainsbury’s new CEO Mike Coupe his £900,000 basic salary (a bit measly compared to his predecessor Justin King’s £940,000), if only he paid all his 157,000 retail staff enough to live on without you and me chipping in? But he doesn’t and, bizarrely, no one is inclined to make him.
When George Osborne announced a freeze of in-work benefits at the Tory conference, his gleaming eyes said: “This is tough, this will hurt, this will turn around the polls.”
Voters abhor a high welfare bill or the notion that benefits are rising faster than wages. But if the chancellor wanted to take £300 a year from every low-paid household, £490 from families with children, could he not at least have added: “I call upon our friends in business, those firms who have done so well under this government, to make up the difference; to help cut the welfare bill and thus the deficit, by paying all their employees a living wage.”
Because the problem is not just soaring welfare but stagnating wages. For the first time in British history, the majority of those classified in poverty already have jobs. In the last decade, food bills have increased by 44 per cent, energy costs more than doubled, but even now that the economy has rallied, wages have barely picked up. Now 5.2 million people, a fifth of the workforce, are paid below a rate at which decent life is sustainable: £8.80 an hour in London and £7.65 for the rest of the UK. And since, without government support, families on minimum wage would barely be able to feed their children, in-work benefits cost taxpayers £28 billion a year.
During the Tory and Labour conferences, much was said about “political disconnect” — the angry distrust voters feel towards the major Westminster parties. It was ascribed to ideological differences on Europe, immigration or even gay marriage. But deep down, it’s about money, stupid. People are slogging, heads down, every hour they can, dreading bills, taking calculators around Asda, scaling down treats, cancelling holidays. Life is a trudge and they see no one capable of lightening their step.
The idea that prosperity should be shared, increased productivity linked to wages, fell apart in the 1980s. That a company’s success is almost wholly attributable to its top executives is now gospel. As Warren Buffett said recently, the class war was won “by my class, the rich class”. Employees know that even low-paid jobs are precious, that if they contemplate something as audaciously retro as striking, a pool of labour from across the EU could rush to take their place.
Companies relish their upper hand, play the austerity card during pay rounds even now times are better. When the retailer Next was asked why, despite record profits, its wages were still below the living wage, it replied that since 30 people applied for every job advertised, how could it be paying too little?
Would that we had a Dickens to record our age. Up on the 21st floor the executive googles ski-breaks in Verbier, while the cleaner emptying his bin walks to work to save on bus fares. The low-paid don’t merely have less stuff; they have less stable relationships, fewer hours with their children (who do worse at school), weaker health. Are their struggles invisible to those who pay their terrible salaries, or do they not care?
I was encouraged to read in the report by the Living Wage Commission that not all lack heart. The head of the cosmetics firm Lush listened to an employee’s financial worries at a Christmas party; Sir John Bond, then chairman of HSBC, was moved by a speech from a Canary Wharf cleaner. Both then introduced the living wage. Indeed Guy Stallard of KPMG, whose company has paid it since 2006, says staff turnover is lower and morale up. Give people the means to be fully human and they will be loyal.
Now more than 700 companies, including eight on the FTSE 100 index, pay the living wage. But in retail, which has the biggest proportion of low-paid workers, not a single high street name has signed up.
These days our only political muscle is as consumers, choosing Fairtrade, making ethical investments. I buy everything I can from John Lewis because it shares its profits with staff. And there would be great kudos for the first of the big four supermarkets who stopped sitting on its mega-profits while adding staff wage bills to the welfare tab.
Benefits for people in work cost the taxpayer £28 billion. But if retailers paid a living wage we could cut this bill
Since a gigantic Sainsbury is my local corner shop, I have a purseful of those coupons: “Here’s £1.45 off your next visit”, etc. But lately I’ve felt I deserve another voucher: “Here’s a tax rebate on the cash you pay our low-paid workers so they can subsist.” Surely that’s worth Nectar points?
Next time you’re in a supermarket, say hello to the nice woman on the till, high-five the young guy refilling the Basics biscuits. The chances are they couldn’t get by without you. A survey of Sainsbury employees by Unite last year found that 60 per cent relied upon government working tax credits to top up their salaries. Even so, in the previous six months, a third had resorted to borrowing money to settle their bills.
Low pay is always seen as a leftie, bleeding-heart issue. Poor oppressed workers. Aux barricades ! Rather it should raise the blood pressure of every taxpayer.
The constant conniptions of supermarkets competing for market share, discounting their rivals, fighting off the German upstarts Aldi and Lidl, distract from the fact that they are vastly wealthy. Sainsbury’s underlying profits for 2012-13 were £758 million; these have trebled in a decade.
Who could begrudge Sainsbury’s new CEO Mike Coupe his £900,000 basic salary (a bit measly compared to his predecessor Justin King’s £940,000), if only he paid all his 157,000 retail staff enough to live on without you and me chipping in? But he doesn’t and, bizarrely, no one is inclined to make him.
When George Osborne announced a freeze of in-work benefits at the Tory conference, his gleaming eyes said: “This is tough, this will hurt, this will turn around the polls.”
Voters abhor a high welfare bill or the notion that benefits are rising faster than wages. But if the chancellor wanted to take £300 a year from every low-paid household, £490 from families with children, could he not at least have added: “I call upon our friends in business, those firms who have done so well under this government, to make up the difference; to help cut the welfare bill and thus the deficit, by paying all their employees a living wage.”
Because the problem is not just soaring welfare but stagnating wages. For the first time in British history, the majority of those classified in poverty already have jobs. In the last decade, food bills have increased by 44 per cent, energy costs more than doubled, but even now that the economy has rallied, wages have barely picked up. Now 5.2 million people, a fifth of the workforce, are paid below a rate at which decent life is sustainable: £8.80 an hour in London and £7.65 for the rest of the UK. And since, without government support, families on minimum wage would barely be able to feed their children, in-work benefits cost taxpayers £28 billion a year.
During the Tory and Labour conferences, much was said about “political disconnect” — the angry distrust voters feel towards the major Westminster parties. It was ascribed to ideological differences on Europe, immigration or even gay marriage. But deep down, it’s about money, stupid. People are slogging, heads down, every hour they can, dreading bills, taking calculators around Asda, scaling down treats, cancelling holidays. Life is a trudge and they see no one capable of lightening their step.
The idea that prosperity should be shared, increased productivity linked to wages, fell apart in the 1980s. That a company’s success is almost wholly attributable to its top executives is now gospel. As Warren Buffett said recently, the class war was won “by my class, the rich class”. Employees know that even low-paid jobs are precious, that if they contemplate something as audaciously retro as striking, a pool of labour from across the EU could rush to take their place.
Companies relish their upper hand, play the austerity card during pay rounds even now times are better. When the retailer Next was asked why, despite record profits, its wages were still below the living wage, it replied that since 30 people applied for every job advertised, how could it be paying too little?
Would that we had a Dickens to record our age. Up on the 21st floor the executive googles ski-breaks in Verbier, while the cleaner emptying his bin walks to work to save on bus fares. The low-paid don’t merely have less stuff; they have less stable relationships, fewer hours with their children (who do worse at school), weaker health. Are their struggles invisible to those who pay their terrible salaries, or do they not care?
I was encouraged to read in the report by the Living Wage Commission that not all lack heart. The head of the cosmetics firm Lush listened to an employee’s financial worries at a Christmas party; Sir John Bond, then chairman of HSBC, was moved by a speech from a Canary Wharf cleaner. Both then introduced the living wage. Indeed Guy Stallard of KPMG, whose company has paid it since 2006, says staff turnover is lower and morale up. Give people the means to be fully human and they will be loyal.
Now more than 700 companies, including eight on the FTSE 100 index, pay the living wage. But in retail, which has the biggest proportion of low-paid workers, not a single high street name has signed up.
These days our only political muscle is as consumers, choosing Fairtrade, making ethical investments. I buy everything I can from John Lewis because it shares its profits with staff. And there would be great kudos for the first of the big four supermarkets who stopped sitting on its mega-profits while adding staff wage bills to the welfare tab.
