The recent changes to pay at Tesco, Wilko and B&Q demonstrate how the the national living wage puts pressure on retailers of all sizes.
Once the seemingly unstoppable master of all it surveyed, Tesco has been on the back foot for so long now that its senior management must walk with a pronounced limp.
It’s almost enough to make you feel sorry for Tesco. But only almost.
However, one initiative that it does seem to have led the way on is rejigging employment terms, quite obviously to negate some of the impact of the impending so-called national living wage, which is due to make its debut in April this year.
As I’ve said in previous columns, I very much support a true living wage, but the way this was dropped on unsuspecting businesses as part of last year’s Budget had more to do with political posturing than it did with a genuine intention to improve incomes.
With no discernible movement on issues affecting retail such as business rates, high street rents, energy costs and the myriad other growing pressures on the retail industry in particular, unilaterally increasing the wages bill was bound to have knock-on effects.
Leading by example
Tesco is merely acting as an exemplar for how a realignment of discretionary pay and conditions will be the inevitable result of the imposition of a higher hourly rate.
Now I’m far from an apologist for Tesco. It hasn’t exactly covered itself in glory as an employer, as witnessed by the mishandling of the workfare scheme a few years ago.
“Tesco is merely acting as an exemplar for how a realignment of discretionary pay and conditions will be the inevitable result of the imposition of a higher hourly rate”
Ian Middleton is the founder of jewellery retailer Argenteus
But in principle I find it difficult to criticise its actions on this occasion, or those of other companies such as B&Q and Wilko that are now following suit.
It has to be said that most of these companies could well afford to pay staff more without reducing benefits elsewhere, but small retailers will have little choice but to look at where they can make savings in order to manage the further imposition of unavoidable fixed costs.
Until we see much needed measures brought in to protect businesses against ever rising overheads, it is going to be difficult to condemn moves such as these that, on the face of it, may seem to some parsimonious.
Most companies would love to pay employees more.
After all staff are by far our greatest return on investment.
But commitment to your team is about more than a headline hourly rate, and pushing employers into penny-pinching moves in order to stay on the right side of the law doesn’t help morale on either side of the equation.
- Ian Middleton is the founder of jewellery retailer Argenteus