Wednesday, 21 November 2012

Tescos pays "equivalent" to Living Wage if employees on minimum wage spend £511 a Tesco

We have now finally received figures from Tesco in its attempt to substantiate its claim, made at the public meeting last week regarding the new Streatham Tesco megastore, that it pays "the equivalent" of the London Living Wage.

By way of background, the claim was made by Matthew Magee, (@TescoLondon) Regional Corporate Affairs Manager, following my question to him. I asked him to confirm that Tesco would pay workers in Streatham the London Living Wage - set at £8.55 to reflect the wage that a person needs to meet basic needs in the capital.

Tesco notoriously pays its cleaning staff the minimum wage (currently £6.19 for an over 21 year old). But the claim was made by Tesco's representative at the public meeting at the Streatham Hideaway, that with all the benefits that Tesco staff receive, they get the "equivalent" of the London Living Wage.

The benefits listed by Matthew Magee now provided to support this claim are as follows:

An 11% pension contribution (which doesn't count because a pension is paid to everyone who receives the Living Wage by law, and even a generous pension does nothing for a person's standard of living now, which is what the Living Wage is all about)

A 3.6% annual bonus, equivalent to an extra 22p an hour (but this is not payable for another four years so again has no impact on day to day living)

A 10% discount card for products at Tesco.

...and that's it.

But let's be generous to Tesco here. What if the money from such benefits were available now? The 11% pension contribution and 3.6% annual bonus would only bring a cleaners salary up to an "equivalent" £7.09 an hour. This means that if you are employed full time (35 hours a week) you'd have to make up the shortfall through the benefit of the discount card. That means spending £511 each week at Tesco in order to get the extra £51.11 benefit via the 10% discount.

Quite where Tesco they expect someone on the minimum wage to get £511 each week to spend at Tesco isn't, as yet, clear.

In the interests of transparency and fairness, here is the email from Matt in full:


I hope you are well. As promised I’ve put below some detail on our pay. It demonstrates that our employees receive a good and fair salary, and why we are proud of our employment credentials.

Before that, however, I would like you to understand our perspective on this issue, and I hope that you respond with balance in the piece which you do publish. By engaging on this topic, we are being brought publically into an issue on which we compare very favourably against our competitors.

I would ask, therefore, that you do not cherry pick the information from this email, but rather report holistically on our employment credentials.

Firstly, our base rate of pay is the best in the industry. Ranging from 4.5% to 12.5% more (averaging 7% higher), we reward our staff with better pay than M&S, Iceland, Sainsbury’s, Asda, Morrison, Waitrose and Coop.

In 2010 we increased our under 18 pay to match adult pay.

We have the best benefits package in the industry. As you will know, statutory pension employer contribution is currently 1%, rising to 3% when auto-enrolment (workplace pensions) comes into full effect - our pension contribution is 11%. We consistently win awards for our pensions package, which is the one of only 4 defined benefits pension schemes in the Ftse 100. In fact, in September this year we won the top accolade at the Pension Scheme of the Year awards.

We provide a 10% staff discount card, and this year all UK staff were awarded a bonus of 3.6% of salary to be paid in cash from 2015, provided they are still working for Tesco.

We have an industry-leading partnership with USDAW. In fact, USDAW said that as a business, Tesco ‘offers some of the best terms and conditions (including pay) for its staff.’

I hope you can see that we have strong employment credentials. Not only do we employ more people than any other private sector employer, we also pay the most of the retailers and have the best benefits package. I would argue that we do pay equivalent to the living wage when viewed in its entirety, are the certainly the closest retailer to paying it in base pay alone.


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