ReportsCathy Augustine

The real cost of low cost supermarkets

ReportsCathy Augustine
The real cost of low cost supermarkets

HARD ON THE HEELS of the failed proposed merger between Asda and Sainsbury's, Asda is following its competitor along the road of forcing new punitive contracts on its staff. Although the new contract offers a slightly higher wage, it introduces unpaid breaks, a requirement to work over bank holidays and shorter notice over hours required - and staff have been told they will be sacked if they do not sign up to the new terms. The flexibility clause is never going to benefit workers - particularly in retail, where staff traditionally work around caring responsibilities and second jobs.

Since 1999, when Asda was bought by the US giant Walmart, it has become increasingly aggressive in cutting prices, wages and the amount of tax it pays. Asda now employs 120,000 staff. According to recent calculations, those staff had to claim £221,300,000 in working tax credits and housing benefits last year to make ends meet.

So, benefits are funding Asda's price war with other supermarkets. Low prices mean that wages and working conditions deteriorate while profits increase.

Research published in 2015 by Citizens UK found that some retailers in the UK are paying their workers so little that the taxpayer had to top up wages to the tune of £11bn a year. The four big supermarkets (Tesco, Asda, Sainsbury's and Morrisons) were the main beneficiaries of this ‘subsidy’. Today, Asda's corporate scrounging has increased to over £2bn. This is a direct transfer from the rest of society to some of the largest businesses in the country. Not surprisingly, Asda – via networks put in place by its parent company Walmart - is one of the biggest retail tax avoiders. So they get away with directly screwing their staff and indirectly screwing the rest of us, while their board members' salaries increase to obscene levels.

Sainsbury's CEO Mike Coupe’s total pay increased to nearly £3.9m last year, as his annual bonus rose nearly 40% to £593,000, according to the company’s annual report. Tesco chief executive Dave Lewis banked a pay packet worth £4.6 million, four months after 9,000 jobs across the grocery giant were placed under review last year. Lewis earned a £1.6 million bonus, on top of his £1.25 million base salary, and £1.3 million through long-term share plans. He also earned £313,000 in pension earnings as well as benefits during the year.

Salary details for ASDA CEO Roger Burnley, aren't easy to find but it's a reasonable guess that his overall package is of the same order as that of Coupe and Lewis. Compare this with the recent report from the Social Metrics Commission, chaired by Conservative peer Philippa Stroud, showing that poverty in the UK is markedly worse now than five years ago.

14.3 million people are in poverty, with seven million people in persistent poverty – meaning that they have been in poverty for two of the previous three years. More than four million people are trapped in deep poverty, meaning their income is at least 50% below the official breadline. Against this backdrop, the current imposition of “contract 6” by Asda is shocking and unacceptable – and is being robustly opposed by the GMB. The union is calling for talks with Asda management, members are publicising the threats being used to force staff into agreement and local media has given the issue extensive coverage.

Richard Burgon, MP for East Leeds, is also supporting staff being bullied into submission. He spoke alongside Tim Roache, General Secretary of the GMB at a rally on 14th September and said: “I ask those who own and run Asda to... take a look into their consciences… Take a look around City Square in Leeds and... you will see those people who create your wealth. Treat them with dignity. Treat them with respect.”

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Wantage CLP and Unite member.