Amazon Increases Minimum Wage for US and UK Workers

Amazon has finally succumbed to political pressure and increased the minimum wage for US workers to $15 per hour and £9.50 per hour for UK workers. There has been mounting political criticism coupled with public pressure for the giant online retailer to pass on some of its spoils to its staff.

In a statement made by Amazon C.E.O., Jeff Bezos on 2nd October 2018, Bezos stated that the company has “listened” to critics. Amazon workers in the US will now be paid $15 per hour while those in the UK will be paid £9.50. The retailer’s London workforce will be paid £10.50 as of November 2018 onwards.

In the US, the pay hike will benefit 250,000 regular Amazon workers and over 100,000 seasonal workers hired during the holiday season. In the UK, the pay hike will help 17,000 regular workers and 20,000 temporary workers. Amazon has a workforce of over 575,000 worldwide.

According to Loop Capital Markets analyst Anthony Chukumba, the new wages will increase Amazon’s annual costs cost by $900m to $1.8 billion. In regards to financials, the increase is less than 1% of Amazon’s $235 billion yearly revenue forecast for this year.

Unions’ take

According to Unions, Amazon can and must do better. Amazon has been under scrutiny in the recent past for having poor working conditions despite enjoying greater financial success. In September 2018, Amazon became the 2nd company in America’s history to have a market capitalisation of $1 trillion. Yet, Amazon’s warehouses have been plagued by long-running protests about poor working conditions and no-contract employment. Amazon’s organic grocery chain workers launched a unionisation drive in 2017. Workers in Germany and Spain have also been on strike since early 2018.

Political pressure

Amazon has been a target for politicians due to labour unrest. The retailer has been receiving political pressure from both sides of the political divide. President Trump has been on record slamming the retailer’s impact on traditional retailers stating there was a possibility Amazon could be subjected to antitrust scrutiny.

The left has also targeted the retailer. 2016 Democratic presidential candidate Bernie Sanders has targeted the company in the past. Senator Sanders has introduced a bill dubbed “Mr. Bezos” aimed at taxing large companies like Amazon whose employees are recipients of government assistance. Senator Sanders has been on record stating there was no reason a company like Amazon couldn’t pay its employees $15 per hour considering they are responsible for making Mr. Bezos the wealthiest person in the world. After receiving the news on 2nd October, Mr. Sanders congratulated Mr. Bezos for doing the right thing and went on to urge other corporate leaders to follow his example.

Pressure to increase pay

Amazon is also under pressure to increase pay. America has expanded economically in the recent past, and the labour market is tightening leaving companies to compete more aggressively for employees. According to the latest non-farm employment statistics, non-farm employees increased in August 2018 the fastest in nine years. The Dallas and Kansas City Fed have already reported that retailers need to offer better wages to attract workers in the food services and retail sectors.

Amazon’s new pay rate is twice the federal minimum wage which stands at $7.25 although some states including Washington DC surpass this level. Amazon’s pay rate in the United Kingdom is higher than the current £7.83 living wage for citizens over 25 years. The rate also surpasses the £9 per hour pledge the UK government has promised as the living wage by the year 2025.

After raising the minimum wage on 2nd October, Amazon pledged to lobby the United States government to increase the minimum wage. According to Senior VP of global corporate affairs at Amazon, Jay Carney, an increase in the minimum wage will have a significant effect on the lives of millions.

Pay rates have also been pushed higher in the UK by high employment levels and minimum wage legislation. UK retailers need to content with Brexit and the uncertainties bound to affect 170,000 European Union nationals working in Britain. Some UK retailers have tried mitigating the impact of increasing per-hour rates by changing aspects like paid breaks and overtime rates among other working condition aspects.

British workers have been subjected to stagnant wages for years now. Amazon’s pay hike is “music to the ears” of its UK workforce. There’s also hope for workers in retail and other sectors following Amazon’s precedent.

Is the Company Director of Swift Money Limited.
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