England, Wales and Scotland section of International Socialist Alternative

BrewDog and Capita give up the pretence of paying workers fairly: Now fight for a living wage

By Sharron Milsom, Socialist Alternative South Yorkshire

Capita, a company operating internationally with 50,000 employees, has dropped its commitment to pay the Living Wage Foundation’s ‘Real Living Wage’ (RLW). The company has contracts for privatised local authority services and in sectors such as the NHS, the DWP and Defence. The Communication Workers Union, which represents workers in TV Licensing and Tesco Mobile, has pointed to Capita’s CEO taking home £1.7 million in 2022. Yet Capita is saying that the RLW can no longer be afforded and it plans to cut 900 jobs.

The announcement came only days after BrewDog pulled out of the Real Living Wage. BrewDog, which employs 3,000 workers in its bars, breweries and offices, sent a letter to staff saying that it was leaving the scheme due to a need to balance its books. Instead of the London RLW rate of £13.15 per hour and £12 elsewhere they are to pay all new employees only £11.44 from April 2024. Existing workers in London will get their current rate of £11.95. The £11.44 is the April 2024 rate of the government’s minimum wage (now named the National Living Wage) for workers aged over 21. What has happened to BrewDog’s ‘three foundational pillars’ of ‘Beer, People and Planet’?

Corporate washing

Over one in nine employees in the UK work for a company signed up to the Living Wage Foundation’s scheme. Asked their reasons for voluntarily paying more than the legal minimum, businesses have often claimed to support the objectives of the scheme and say they are a socially responsible employer. But the main, or real, reasons are typically about what the living wage scheme can do for their business: 94% say it’s benefitted them by improved reputation, improved recruitment and retention of workers, and by obtaining contracts. Where the business would have had to pay similar rates anyway to attract workers it may not even be an extra cost.

Employers think there is financial value in being seen as an ethical company. BrewDog has appeared on the Sunday Times’ list of Best Places to Work. It also applied for and was accepted as one of the best 100 companies by the Top Employers’ Institute. Similarly, many employers think there is value in being seen as protecting the environment (‘greenwashing’) even when their real commitment is dubious or non-existent.

Of course, the majority of UK employers don’t pay the RLW. They have judged the cost of paying these rates to their lowest paid workers to be higher than any expected benefit of joining the scheme. A number of other companies including Capita and BrewDog have now made that judgement.

We need a genuine living wage

The latest annual increase in the RLW – to £13.15 in London and £12 elsewhere – is an increase of 10.1%, which followed a 10% increase last year. This is what apparently can’t be afforded. Yet inflation for low paid workers is particularly high as they spend a big proportion of their incomes on energy and food. So these are not increases in real income. Nor have they been pulled out of the air. The RLW rates are based on calculations by the Resolution Foundation. For someone working 37.5 hours per week the hourly rate aims to allow for a ‘minimum acceptable living standard’.

Socialist Alternative doesn’t regard the rates as enough to constitute a genuine living wage. We call for an immediate rise in the government’s minimum wage to £20 per hour. This should apply to all workers including young people under 18 who don’t qualify for the Living Wage Foundation’s scheme. Full time workers shouldn’t need to have to claim Universal Credit to make ends meet. Nor should workers’ incomes be dependent on whether their employer voluntarily signs up for a scheme. A genuine living wage requires trade unions fighting for this and nonunionised workplaces becoming organised. 

When employers say they can’t afford to pay, whether about wages or job losses, socialists say ‘Open the books!’ The trade union and the workforce should be able to see the company’s real financial position. How much is paid to the top executives? Are dividends being paid to shareholders? This is not to say that we accept financial difficulties as a justification for low pay. If the employer can’t afford the pay, then clearly we can’t afford the employer. We demand that such firms, if providing socially useful products or services, be taken into public ownership.

No room for ‘good’ employers

Neither should socialists fall into the trap of dividing employers into ‘good’ and ‘bad’. An employer signed up to the Real Living Wage will reconsider when they no longer think the benefits to their reputation or recruitment and retention process is worth the extra pay. Or when their finances have worsened and they’re wanting to impose pay cuts or freezes to improve their profits or stay in business.

A good employer who would pay their workers not only a living wage but a wage where they can live well would be an employer which goes out of business. Competition is an integral part of capitalism. Companies seek to reduce their costs, both pay and other business expenses, in order to out-compete others. An employer with higher unit labour costs than firms with a similar product is likely to be undercut.

This doesn’t mean that we can take at face value what employers and capitalist politicians say about competitiveness. When the minimum wage was being introduced in the UK in 1998 at a low figure of £3.60 per hour many were predicting up to 750,000 job losses. This didn’t happen. Nor have most businesses carried out their threats to move abroad if their taxes are increased. But businesses are still subject to the constraints of the market.

Even social enterprises, specifically set up to meet social objectives, are subject to the same market forces. As are workers’ cooperatives which still have to buy and sell their products within capitalism. A real living wage will require not only trade union organisation and struggle. It will require a socialist planned economy where publicly owned enterprises are democratically controlled by the working class.

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