Pay deals under scrutiny
In a cost of living crisis, information around the lives and net worth of key corporate figures is being put under the public spotlight by the media.
The Guardian recently reported how a company owned by the Hinduja family, who have been coined the “UK’s richest family”, has refused to pay all UK workers the “real living wage”.
In a quite damning report, the Guardian criticise their reluctance to up the wages of some of their workers, comparing the family’s personal wealth growth for the year of £11.5 billion (they have an estimated personal wealth of more than £28.5 billion as the general secretary of the PCS union pointed out) to the request to up employee hourly rates from £9.75 to £10.90 based on the “real living wage”.
Outsourcing company, Hinduja Global Services, which is part of the Hinduja Group, had offered a small pay rise of 3.25% but that fell short of the 9.9% rate of inflation that is expected to grow.
They are now facing media scrutiny, union action and likely will struggle to continue being competitive in recruitment efforts. Employee dissatisfaction is a significant indicator that an “ESG” crisis is on its way for a company.
£9.75 an hour is above the legal minimum by 25p – there’s no assertion that the company has made a misstep legally, unlike Boohoo who were criticised for paying workers less than the minimum wage. The effect is the same, however – the legal standard and the social standard differing. It’s common sense now to understand that the legal bare minimum is not what consumers, or employees in a competitive job market, expect.
This criticism is timed with news that Asda intends to reduce 1,500 grocery delivery drivers’ hourly pay by more than 12% – the Guardian, again, reporting that the company will be ending the £1.50 an hour premium introduced in the summer to retain talent. It reported that the premium was promised until at least Christmas but is to be withdrawn in October. Again, this has caused widespread criticism and prompted unions to get involved.
As the cost of living crisis continues, it is likely that more companies will enter into a crisis of their own – by failing to adhere to what their customers and employees expect of them. Prioritising the bottom line when it comes to salaries is all very well and good, but if this affects your reputation and, consequently, sales and employee retention, this can also have a similarly negative effect on the bottom line.
Again, aggrieved employees, current or former, pose a significant risk to a company’s reputation. This is further exacerbated by demonstrations of affluence or, even, just the fact of a high net worth founder or owner. We’ve seen this in criticism of key individuals such as Elon Musk, Jeff Bezos, Richard Branson – all of whom have seen their wealth as the daily focus of numerous reports and subsequent criticism.
With no sign of the cost of living crisis abating, we will only see more stories like this – unless corporates start seeing the risk in certain cuts when it comes to wages, we can expect the media to start publishing information about the lives and net worth of company directors, owners and other key figures, with information that would have originally been perceived as private, becoming part of the public domain.