Further to my previous blog post about the introduction of the national living wage (NLW), I was interested to read that not all of us think the effective increase to the national minimum wage will have a positive impact on the UK or its employees.
You will by now probably be aware that larger businesses such as Kingfisher (owners of the likes of B&Q and Screwfix) immediately put provisions in place to ensure that the introduction of the NLW had a minimal impact on their finances. Kingfisher, for example, advised all employees that although they will increase the hourly rate of pay to £7.66 across the board (regardless of age), they will remove benefits such as time and a half/double time for working on Sundays/bank holidays and the increased pay previously received by staff working in London. In addition they have cut summer and winter bonuses and advised employees that should they not agree to these changes and sign a new contract of employment, “unfortunately this will result in your dismissal”.
Workers have understandably reacted angrily to the changes and created a storm on social media by setting up a Facebook campaign and petition entitled “Don’t use living wage as an excuse to cut pay and benefits”. Rumour has it that the campaign was set up by a B&Q Manager under the pseudonym of Kevin Smith, who wrote:
Those who have worked within the business for over a decade and know our customers and our business the best are losing thousands of pounds a year. Big businesses like B&Q are using the national living wage as an excuse to cut overall pay and rewards for the people that need it the most.
I hope that with the support of others, through signing this petition, we can influence B&Q and other businesses to reverse these changes. I also hope they acknowledge that treating people in this way will have a negative impact on their business in the future.
Currently (as of 5th April 2016) the petition has 134,074 supporters.
By way of response, a B&Q spokesperson has stated:
We understand and are sorry that some of our colleagues feel upset by the changes. This has been a difficult decision for us and our aim has always been to reward all of our people fairly so that employees who are doing the same job receive the same pay. That wasn’t the case as, for a long time, some had been being paid different allowances and that couldn’t continue.
It’s important to bear in mind that after the changes, B&Q is still offering far more than the basic minimums. It is paying the more generous rate to those who are under 25, who have no claim to the Living Wage – which makes it a brilliant option for young people.
It also retains a performance bonus, and perhaps most notably offers a 14% employer contribution to the pension – far better than the statutory minimum. There’s also a ShareSave scheme and five weeks holiday a year.
No one’s base pay is being reduced at all, and we are paying compensation so no one’s bonus or benefits will be reduced in the first twelve months. We are also committed to reviewing the position in twelve months’ time to ensure we remain one of the best payers in retail and can attract and retain the best people. During that time, we will gather all the feedback, evaluate what changes to make for 1 April 2017 and will be engaging with the B&Q People Forum and our employees more widely. Our rewards package remains one of the best in retail and this year, we will be paying more than we did last year.”
People will undoubtedly argue that due to B&Q’s size, they should not be comparing themselves with other, perhaps smaller businesses, who are doing everything they can to survive and therefore will continue to pay the absolute minimum to their employees to ensure this. However, I’m sure that employees from other large companies will also come forward to disclose lower pay rates/benefits than those at B&Q. The debate will therefore undoubtedly continue.
There has also been further criticism of the introduction of the NLW with two Cabinet ministers who are campaigning to leave the EU, arguing that that it will entice workers from some of the poorer EU states who may be looking for a pay rise.
John Whittingdale, Culture Secretary, told The Times that the policy will “fuel even higher levels of immigration” from EU workers, therefore putting a strain on the UK’s public services.
Furthermore Commons leader Chris Grayling told BBC News that although the national living wage was “the right thing for working people in this country” it “certainly makes it more attractive for somebody to move to the United Kingdom to get a job because it increases the differentials with other countries”.
Mr Grayling continued:
The best way of addressing this is to ensure that we can put in place controls and of course those controls cannot be in place as long as we are members of the European Union.
Will this have an impact however, given that the UK’s national minimum wage rates were already amongst the highest in Europe? What do you think? Has George Osborne created an even bigger problem for the UK?!