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UK – Minimum wage used to discourage British workers and recruit foreigners

06 September 2013

Some of Britain’s largest companies offer jobs on, or just above, the minimum wage because they can employ migrant workers who are willing to accept lower-paid roles and ‘flexible’ contracts, according to the former HR director of retail giant Morrisons.

Norman Pickavance said the minimum wage, which is currently £6.31, was brought in to protect workers from exploitation by providing a minimum threshold, but has become the ‘new normal’. Temporary agency migrant labour is increasingly being used in the food industry as a direct result.

Mr Pickavance told HR magazine that migrant workers’ willingness to accept minimum wage jobs and poor working practices has put pay rates in a headlock and is creating an “invisible economic cap on wages”.

Political parties are beginning to talk tough on the issue and employers have been caught in the crossfire. Last month, shadow immigration office minister Chris Bryant accused retailers Tesco and Next of favouring Eastern European workers over British candidates.

In a leaked version of a planned speech, Bryant singled out the two retailers, claiming they were “unscrupulous employers” only interested in finding cheap labour.

Mr Pickavance told HR that although he’s not accusing large employers of actively favouring people from Eastern European countries, migrant workers are more likely to accept flexible working contracts, such as zero hours and ‘job-and-finish’ (unscheduled hours).

He added that although big employers have not been overtly exploiting migrants, they have “expected levels of flexibility” that would have been “unthinkable” 20 years ago.

“The additional supply of labour, plus an environment of minimal employment laws and weakened trade unions, helps to explain why it has been relatively easy for employers to introduce the most flexible working practices in Europe,” he said. “It has become common practice to use temporary agency labour in industries like food production, allowing companies to ‘switch on’ and ‘switch off’ labour without notice.”

He said these types of contracts mean migrant staff are often bussed in and out from miles away to work on production lines, without knowing whether they have work the next day.

He added migrants put up with such poor working conditions because “it’s better than back home”; for example, the minimum wage in Bulgaria is 73p an hour.

Many organisations, including Barclays, KPMG and the TUC, have campaigned for employers to pay a living wage of £7.45, but many retailers are paying below this, including Tesco, John Lewis and Marks & Spencer.

Peter Byrne, director of HR Legal Service, told HR magazine the issue was about employers being able to select talent from across Europe. “Business can employ British nationals or nationals of the European Economic Area without the need for permission. No matter your political view on such issues, surely the fundamental principle is that the most capable worker for the job should get the job, no matter their nationality?”

He said it would be a “shame” to see rules imposed forcing firms to favour British workers. “In competitive markets and tough times, businesses need to find raw talent that can contribute to future success, not worry about 
nationality quotas,” he said.

But Mr Pickavance believes that employing migrant workers on low wages is as much an ethical issues as it is economic.

“There needs to be a commitment by British businesses to treat all employees with fairness, dignity and respect and there needs to be a national debate about what this means in terms of pay,” he concluded.


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