A group of large retailers have hit back at claims their employees are forced to rely on government benefits to supplement their incomes, to the tune of £11bn per year.
Community campaign organisation Citizens UK issued a report this week claiming that the employers of five million retail workers in the UK are being “subsidised” by the taxpayer, as staff are forced to take in-work benefits such as tax credits to supplement their incomes.
It issued an open letter to chief executives Lord Simon Wolfson at Next, Dave Lewis at Tesco, Andy Clarke at Asda and Mike Coupe at Sainsbury’s, calling on them to pay the living wage. The letter had 205 signatures as Drapers went to press.
Citizens UK said staff at Next are forced to claim £67m in benefits each year in order to afford “a basic standard of living”.
But Next questioned the calculations and findings, saying staff on entry-level wages only account for half of its 50,000-strong workforce.
A spokesman said the company increased its entry-level wages by 6% last year and chief executive Lord Wolfson said he will take no bonus this year so the company can increase them by at least 5% in the October annual review.
Wolfson added: “We recognise that, for some people, living on retail wages is very difficult, particularly if they only work part-time. Not everyone’s circumstances are the same and retail wages provide many families and students with a valuable source of additional income.”
Asda and Tesco also hit back at the claims, arguing that their pay packages are competitive.
The minimum wage is currently £6.50 and will rise to £6.70 in October. The living wage, calculated by the Living Wage Foundation, is £7.85 or £9.15 in London.
Helen Dickinson, director general of the retail trade body British Retail Consortium, said the average retail wage and benefits package is equivalent to around £8.40 per hour.
“People are attracted to the retail industry because we provide very high levels of job flexibility, so we’re focusing our efforts on working out new ways to combine this flexibility with more senior roles and higher levels of pay,” she said.
She pointed out that the retail industry paid £19.5bn in core business taxes in 2014.
In its election manifesto published on April 13, Labour pledged to raise the minimum wage to £8 per hour by October 2019 and promote the living wage.
Businesses that sign up to pay the living wage in its first year in office would receive tax rebates and public listed companies will be required to report on whether they pay the wage or not.
The Conservative Party’s manifesto, published on April 14, said the minimum wage should increase to £8 by the end of 2020. It will encourage businesses to pay the living wage whenever they can afford it.
The Green Party pledged to increase the minimum wage so that it is a living wage, targeting £10 per hour by 2020.