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Living Wage Could Be 'lethal' For Tesco, Chief Executive Dave Lewis Says Despite Aldi And Morrisons' Commitment

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The National Living Wage could prove "lethal" to Tesco, its chief executive has said, despite commitments by other supermarkets, including budget store Aldi, to pay it.

Dave Lewis said the company, which employs more than 500,000 people and has nearly 8,000 stores, had a "history of paying people well" but claimed the living wage could combine with other rising costs to create a "potentially lethal cocktail".

A National Living Wage of £7.20 an hour for over-25s will be introduced in April, above the minimum wage of £6.50 per hour.

There is also a UK Living Wage of £8.25 an hour and London Living Wage is £9.40 an hour, calculated to reflect the basic cost of living and advocated by the Living Wage Foundation.

Mr Lewis told the Confederation of British Industry (CBI) conference that the living wage would have "unintended consequences".

His comments follow commitments by other stores, including Aldi and Morrisons, to pay all staff the living wage. [More at link]

http://www.huffingtonpost.co.uk/2015/11/10/living-wage-tesco-dave-lewis-aldi-morrisons_n_8519306.html?utm_hp_ref=tw

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Odd really, as Tesco is well ahead of Morrisons at online sales, and also makes greater use of self-service checkouts. its stores are bigger and presumably allow better economies of scale with staffing levels. I would have thought that staffing level versus turnover was lower for Tesco and so a living wage would impact them less.

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Headline should read: *Man who pays himself £4m a year says he can't afford to pay his staff £7.20 an hour*...

I highly doubt if you divided 4m between the number of staff tesco has below the 'living wage' it would raise it above the living wage...

edited.

Edited by Executive Sadman

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Perhaps it's time we had a maximum wage? We could cap top pay as some multiple of the lowest paid, that way if the likes of Lewis wanted to pay his staff lower wages, then he would have to pay himself a lower salary. My hunch is that he would soon raise staff wages.

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OR.. they can put up the price of what they sell to the point that it pays this mediocre so called living wage (it still isnt unless you are still subsidised in one way or other). Paying wages which are not 'slave labour' should not be part of modern capitalism. It does work in some other countries and the outcome is better all round for everyone including the managment of supermarkets.

read this, spells it out perfectly.

http://www.maxkeiser.com/2015/11/why-i-will-never-hire-anyone-even-at-1hour/#more-78897

worth reading. Our politicians should start reading more widely instead of believing their particular dogma no matter how often it fails.

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My heart bleeds for them. If they're so inefficient that they can't pay that then guess what, they'll either have to put their prices up or figure out how to do things for less. If they can't manage that, then there's plenty of other companies who will, that's why capitalism is so good. F*ckers.

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Why blame the living wage? The real problem Tesco took the wrong decisions years ago, creating massive Tesco extra store's when the trend has been the other way.

Re: Internet shopping, I am pretty sure its not actually profitable.

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I highly doubt if you divided 4m between the number of staff tesco has below the 'living wage' it would raise it above the living wage...

edited.

Indeed... 500000 staff would get £8 each a year!

I have no problem with chief execs earning high salaries when they do a good job. Sorry shop workers but you're easy to replace so £8 an hour seems more than fair.

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Looking at the last few years, I would say Tescos' management is deadly for Tescos.

A couple of quid on a till monkey is neither here or there.

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So he's basically saying that, without government (taxpayers) subsidising his labour costs, his business isn't viable.

Well, tough. Tesco will have to either become much more efficient or shrink into a convenience niche. Those Extra stores, long since irrelevant as a supermarket offer, sit on huge tracts of land in urban areas which would be classed as brownfield, perfect sites for new housing.

Lewis' bleating should be ignored. My fear is that he may have the ear of government. When Redrow's boss Steve Morgan whined to David Cameron that he wasn't able to sell the houses his company was building, he should have been told, well, drop the price then. Instead we got HTB.

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Odd really, as Tesco is well ahead of Morrisons at online sales, and also makes greater use of self-service checkouts. its stores are bigger and presumably allow better economies of scale with staffing levels. I would have thought that staffing level versus turnover was lower for Tesco and so a living wage would impact them less.

Well if you know a bit about Lean Manufacturing you'll see two principles where their stores fall down:

Elimination of Waste

Respect for Humanity

One example:

I remember going into a big Tesco's once (very rarely go there now so don't know if this still happens) in the late evening and they were just throwing away bread, they hadn't even bothered to mark it down, they were breaking it up and throwing it in to rubbish bags. That's waste on so many levels and lack of respect for humanity that bread could have been marked down or given to homeless charities.

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Aldi and Lidl both pay the living wage despite their stuff being considerably cheaper than Tesco.

Not German efficiency so much as purely the UK disease of severe greed at the top. That why the UK is a rip-off place for everything from council tax to cars to houses etc

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It's all about the debt, with some of these big companies the products and the staff are just the flimsy frontage on a huge ocean liner of debt.

This, director salaries, bonuses, share holders and debt interest.

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Indeed... 500000 staff would get £8 each a year!

I have no problem with chief execs earning high salaries when they do a good job. Sorry shop workers but you're easy to replace so £8 an hour seems more than fair.

Are you Adam Crozier?

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Poor financial decisions only mean those with the least suffer the most and those who instigated bad practice still maintain or improve own financial standards......there is a moral in the story somewhere.

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I hope my local Tesco can hang on.Its an Extra store,hardly ever anyone in it,usually more staff than shoppers,but they have to reduce so much food every day i feed my family for £30 a week.Then again all the extra special things they reduce from £5 to £1 i guess an extra 10p would cover the increase in wages :D

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Headline should read: *Man who pays himself £4m a year says he can't afford to pay his staff £7.20 an hour*...

This.

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Perhaps it's time we had a maximum wage? We could cap top pay as some multiple of the lowest paid, that way if the likes of Lewis wanted to pay his staff lower wages, then he would have to pay himself a lower salary. My hunch is that he would soon raise staff wages.

good idea. not least since boards often destroy value. Previous Tesco incumbent a good example.

10-20x seems reasonable.

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Aldi and Lidl both pay the living wage despite their stuff being considerably cheaper than Tesco.

Not German efficiency so much as purely the UK disease of severe greed at the top. That why the UK is a rip-off place for everything from council tax to cars to houses etc

Higher wages will certainly be less of an adjustment for them than it will be for Tesco. I don't know about Lidl, but locally Aldi pays £7 an hour for stock room staff and £7.70 for tills.

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Aldi and Lidl both pay the living wage despite their stuff being considerably cheaper than Tesco.

Not German efficiency so much as purely the UK disease of severe greed at the top. That why the UK is a rip-off place for everything from council tax to cars to houses etc

They don't have shareholders either.

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