AFTER FAIR trade and fair prices, the living wage is the next source of pressure for retailers and caterers.
The local Co-op supermarket in North Berwick is closing down, with nearby Tesco having hovered up profits and customers over the past few years. Low price has, little by little, trumped high ethical standards.
In its place will sit an Aldi, much to the chagrin of Tesco. The discounters are in rude health and there is now the chance that even lower prices will trump the low prices that trumped ethically sourced food. It might seem as simple as paper-scissors-stone, until you throw in the fact that Aldi pays its staff “close to the living wage”. We all know about fair trade for farmers and fair prices for suppliers, but what about fair wages for employees?
“The discounters are the market leaders” on wages, says George Gabriel of the Living Wage Foundation, which accredits 1,000 businesses, setting their minimum hourly pay. In November this was increased to £9.15 in London and £7.85 elsewhere. The minimum wage is £6.50. Nestlé is among its big catches – the first major food manufacturer to make the commitment. “We’re still waiting for the first major British grocer to pay the living wage,” says Gabriel, adding: “Imagine how challenging it would be for a Sainsbury – a value-based brand – to sit back while Aldi and Lidl became the first.”
Business reputation is at stake – a survey by GLA Economics found that 70% of employers felt their reputations had been enhanced as first movers. Sodexo may soon be among them, having committed to make two bids when it tenders for contracts, one with the living wage and one without, as part of the foundation’s service provider recognition programme (see page 11 Jan Issue).
For those offering public-sector services, charging more is never easy. The chancellor announced a further £60 billion of spending cuts by 2020 in his autumn statement, and local government is expected to bear the brunt. With caterers already charged with sourcing more Fairtrade, organic, healthy and seasonal products, how do they then ask for more money to pay a sustainable wage?
The British Hospitality Association says the living wage “cannot be implemented without destroying jobs”, while the British Retail Consortium notes the “range of benefits” staff get on top of wages, such as pension contributions and in-store discounts of “up to 15%”. Campaigners, in turn, point to the boardroom. Figures published by the High Pay Centre show that the CEOs of Whitbread and Compass are paid 415 and 418 times the average employee.
Labour’s promised tax breaks for companies that pay the living wage could help. The party has also made the payment of the living wage under government contracts a “priority”. About 30,000 workers could be affected by such a move. Government leadership could also stimulate wider uptake; research by KPMG shows that 5.28m people earn less than the living wage.
As awareness increases, the spotlight turns on those that are struggling to meet expectations. This is a position that not only the grocers have found themselves in.
As Footprint went to press, workers at fast-food companies in more than 190 US cities were gearing up to walk out in the latest of a series of protests demanding a higher minimum wage. And the feeling is contagious.
Meetings have taken place between the US representatives and the Bakers, Food and Allied Workers Union in the UK. McDonald’s, where 90% of workers are on zero-hours contracts, is in the firing line as protesters call for a £10 minimum. It hasn’t helped itself with statements claiming that workers start on “more than the national minimum wage” – £6.51 rather than £6.50. “Low-cost food retailers don’t have to have a low wage structure,” Gabriel argues. “Look at Mercadona [the Spanish discounter] which pays almost double the minimum wage.”