Daily Management Review

Starbucks Agrees to Pay "National Living Wage" to All UK Employees


Starbucks Agrees to Pay "National Living Wage" to All UK Employees
Starbucks employees of UK would now get enhanced wages as the global café chain agreed to pay the National Living Wage to its employees.

The basic pay for all employees, including apprentices would be increased to £7.20 an hour next April, the company announced on Friday. While an undisclosed ‘London premium’ would be paid to workers in the capital, the employees in the rank of supervisors would be paid £8.72 an hour.

Employees moving homes would be provided with interest-free loans as well as a rental deposit. The loans would be repayable over a 12-month period.

Starbucks has arrived at the loan decision after conducting a poll among the employees and the housing problem turned out to the most important one for the employees’ perspective.

“That is no surprise. People are working in cities and not being able to afford housing close to where they work,” said Kris Engskov, the president of Starbucks in Europe, the Middle East and Africa.

The loans will be repayable over a 12-month period, he said, adding that he expected them to be extremely popular.

The Financial Times however reported that the new wage systems at Starbucks would become effective from November this year.

Last week supermarket chain Lidl had announced the adoption of a Living Wage of £8.20 an hour across England, Scotland and Wales and £9.35 in London. The new wages would be effective from October. The National Living Wage has also been adopted by hospitality companies Wetrherspoon and Whitbread.

Whitbread, the owner of Costa Coffee, had however said that it expected to cut spending and increase prices to offset the “substantial” cost of the new minimum wage. Further details in this matter would be disclosed by the company at its half-year results on October 20.

A new “national living wage” of £7.20 an hour for over-25 years was set by Chancellor of the Exchequer George Osborne in the last Budget. However Starbucks said that the employees would be paid the new wages regardless of the age.

The earlier wage paid by Starbucks was £6.77 an hour.

The average pay for Starbucks’ 7,500 UK staff would be increased to £7.98 an hour for the employees working in the UK stores that are operated by Starbucks directly. Franchisees are yet to decide to follow a similar wage structure as set by Starbucks.
“We believe in equal pay for equal work,” said Engskov to the Financial Times.

While being “supportive” of the government’s goal for pay of £9.35 an hour by 2020, Engskov declined to divulge details of how much the increases will cost the company.

“It is a big investment. I will not go into the financial numbers but this is about the competition. “If you look, this is the most competitive retail market in the world and the most competitive coffee market in the world and it is increasingly difficult to find great people,” Engskov told the Financial Times.

The US based café chain had in recent years been criticized in the UK for having paid millions in royalties and interest from its UK operations to other Starbucks companies overseas in order to lower its tax bill.

(Sources:www.ft.com & www.digitallook.com) 

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