Research by Citizens UK found that British firms are paying staff so little that taxpayers need to pay £11bn a year to top-up the wages of millions of people working in supermarkets and other low-paid jobs.
The money is paid to some 5.2m workers in the form of tax credits and other benefits. Tesco, Asda, Sainsbury’s and Morrisons alone are costing just under £1bn a year in tax credits and extra benefits payments.
Of all the companies examined by Citizens UK, however, Next had the highest average subsidy of £2,087 per head. The charity suggested it was due to the company’s high proportion of young employees who are typically paid £6.70 an hour. Chairman John Barton had even been alleged to say he agreed with the principle of a Living Wage but that it was not for Next to endorse, at a shareholder meeting.
“We don’t run the business to satisfy the needs of the Living Wage,” he said. “We try to pay as much as we reasonably can in the context of the environment we work in. The research into the living wage helps us understand the problems but it is not our job to endorse you.”
But as chancellor George Osbourne’s summer Budget set in motion the plan for workers aged over 25 to be paid a minimum of £7.20 an hour from April 2016 – rising to £9 by 2020 – research has found that Next came last in the FTSE 100 pay league, with the average worker being paid £12,900 a year.
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Banc De Binary, responsible for the report, said that it beat Sports Direct, who paid its workers an average of £17,900 per year. This, the company explained, was because of its generous bonus scheme for permanent staff. The opening of the sportsdirectfitness which is part of Sports Direct has also had an impact.
On 16 July it was announced that owner Mike Ashley would be handing out some five million shares to 2,000 staff, worth £37m.
Oren Laurent, founder of Banc De Binary, said: “Next has adapted to the peaks and troughs of its business by staffing accordingly, meaning it staffs up for peaks with temporary workers. With the controversy over zero-hours contracts, some may find it surprising to see that Sports Direct is actually one of the more generous retailers in the FTSE 100 when it comes to pay.
“For staff that have stayed with the company long enough to enter its bonus scheme, working for Sports Direct has turned out to be quite a lucrative career.”
However, Banc De Binary also found that Ashley makes one of the lowest contributions to staff pensions in the FTSE 100.
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