(Wednesday 13th November) Responsible investment NGO ShareAction is today warning shareholders in Britain’s largest retailers they face long-term financial risks unless they act to improve pay and conditions for low-paid workers.
In its new guidance for investors, the charity highlights how a business model based on poverty pay at retailers such as Next and JD Sports is unsustainable and poses broader threats to the economy, through increased inequality, a less healthy workforce, and pressure on state resources.
ShareAction is calling on shareholders to adopt a responsible investment approach to raise standards across the sector - by asking companies to pay real Living Wages, improve conditions and commit to guardrails that secure all retail workers, from delivery drivers to cleaners, a decent standard of living.
Dan Howard, Head of Good Work at ShareAction, said: “The UK retail sector is one of the biggest employers in the country, but its business model is built on poverty pay and insecure contracts.
“This is not sustainable. It leaves workers struggling to afford the basics like heating and food. This harms our economy by driving up inequality, hindering productivity, and adding pressure on state resources through increased health and welfare costs. All of this is ultimately a threat to the long-term interests of shareholders.
“We need to see investors act now to raise standards across the whole retail sector by using their influence to urge companies to pay real Living Wages, which would boost the quality of life of hundreds of thousands of workers and help shape a fairer, healthier economy for everyone.”
In the past year, as part of its Living Wage campaign for high street workers, ShareAction attended the annual general meetings (AGMs) of major retailers including Tesco, Greggs, Next, and B&Q owner Kingfisher, to make the case for these businesses to end poverty pay. As a result of the campaign, Kingfisher committed to pay all its directly employed staff the real Living Wage this year.
ShareAction, and the Good Work coalition of investors it coordinates, which represents £5.1 trillion in assets under management, continue to actively engage these companies on pay. Investor concern continues to grow over businesses which ignore the reputational and long-term risks for investors’ portfolios created by low pay.
The UK retail sector is an outlier compared to other sectors, with almost a quarter of UK retail workers – 818,000 – not being paid a real Living Wage, almost double the national average.
While high inflation has squeezed living standards for low-income families, the UK’s largest retailers have remained profitable. Last financial year, publicly-listed UK retail companies made collective pre-tax profits of over £6.7 billion and paid out total dividends to shareholders of over £2 billion.
In October, Next announced it was on track to post record pre-tax profits of £1 billion this financial year. Last financial year, JD Sports posted £811 million in pre-tax profits, up by 66 per cent from the previous year.
This comes as the UK government takes steps to improve conditions for workers. ShareAction is urging the UK government to improve its Employment Rights Bill and Living Wage proposals, with a national Living Wage that reflects the costs of living for low-paid workers, and stronger job security for workers, including fair notice periods and compensation for shift changes.
Notes to editors
The responsible investment guide on tackling low pay in the UK retail sector can be read here.
ShareAction’s letter to Angela Rayner outlines more information on its calls to update the government’s Employment Rights Bill and Living Wage proposals.
Established by the Living Wage Foundation, the real Living Wage is the minimum hourly rate necessary for workers to afford housing, food, and other basic needs. The new real Living Wage rates for 2024/25 are £12.60 per hour in UK (up from £12) and £13.85 per hour in London (up from £13.15).
