At first glance, it may feel unfair to pick on Sainsbury’s in a campaign against low pay in the supermarket sector. The group’s rate of hourly basic pay is higher than Tesco’s (£10 versus £9.55) and, among Sainsbury’s directly employed staff, it is only those in outer London who are currently denied the real living wage. The company is not operating from the P&O Ferries manual of employee relations.
Yet one can equally argue that campaign group Share Action, with backing from investment heavyweights Legal & General and National Employment Savings Trust among others, has chosen well in calling on Sainsbury’s to pursue full living wage accreditation. In the midst of a cost of living crisis, there is a strong sense that if cuddly Sainsbury’s, which will gush endlessly about its responsible approach to doing business, can’t step up in all respects, then nobody in the supermarket industry ever will.
How much would it cost to make the leap? The company won’t say but one suspects an increase from £10.50 to £11.05 in outer London wouldn’t be the most stretching element. Rather, it might be the inclusion of third-party contractors, such as cleaners and security guards. Then there would need to be commitment to keep pace with the real living wage permanently – a pledge, the boardroom may feel, that is tricky if rivals won’t budge.
Yet Sainsbury’s and its listed and unlisted peers would be well advised to take the shareholder resolution seriously. Supermarket-land is a place of stable profit margins, so it is hard to understand how the main operators have been able to resist real living wage accreditation for so long. Half the companies in the FTSE 100 index are already there. As energy prices rise, and then rise again, this campaign could strike a popular chord. One of the big chains should show leadership and break ranks.
Why Barclays remains hard to love
In the long history of Barclays’ self-inflicted cock-ups, this one almost counts as mundane: a £450m hit to profits from what looks like a straightforward error in the admin department.
The investment bank had authorisation in the US to issue $21bn-worth (£16bn) of structured notes – securities giving exposure to baskets of stocks, interest rates, commodities or whatever – and exceeded its limit by $15bn. The £450m liability, the bank’s current best estimate, arises from the need to buy back at par value those notes that are showing a loss.
How could a bank with a small army of risk and compliance officers make such an expensive mistake? We’ll have to wait for an explanation until an independent body has reviewed matters including “the control environment”, but something clearly went spectacularly wrong in, or between, the risk and compliance departments.
The affair is a long way short of being career-threatening for new chief executive CS Venkatakrishnan, but Barclays has just blown three months-worth of shareholder returns (at 2021’s pace) in one go. It is a reminder that the investment bank, for all the signs of greater stability and discipline in the last couple of years, remains hard for investors to love. With Barclays, there’s always something around the next corner.
Not exactly ship-shape at P&O Ferries
It’s a bit rich for P&O Ferries to claim all it ever wanted was “a level playing field when it comes to pay and conditions on British ferry routes”. If that were the case, the company’s wealthy owner, Dubai-based DP World, would have used its easy access to UK government ministers to highlight problems and seek consensual reform. Instead, DP and P&O Ferries opted for on-the-spot redundancies and brazen law-breaking.
By doing so, they created such an uproar that the government will introduce speedy legislation to force minimum wages on UK ferry routes. In the sense, P&O Ferries will have got its desired level playing field, but it’s hard to regard this saga as anything other than a colossal example of management incompetence.
The P&O Ferries brand has been trashed for years, and the company may end up having to pay compensation awards to non-consulted workers anyway since not all will wish to return to the shambolic ship. Meanwhile, Peter Hebblethwaite, the hapless chief executive, surely won’t be able to resist calls for him to walk the plank.
At that point, attention will concentrate solely on DP World. It blessed the sackings, as was clear in last week’s testimony to MPs, and has expressed no regrets subsequently. Even if the government gets its way on the ferries, DP does not deserve a place on the UK’s freeport scheme; the relationship should be broken permanently.