Mark Donne: Shelf-stackers aren't the only victims

The cost to the state of subsidising low pay with tax credits and housing benefit is huge

Together, the big four supermarket chains make up the largest block employer in Britain outside of the NHS: nearly 900,000 people work for Tesco, Asda, Sainsburys or Morrisons. And the Coalition is banking on the supermarkets recruiting again in serious numbers in 2012. But a new report by the Fair Pay Network demonstrates how the Big Four are complicit in keeping thousands of people in poverty. In the last trading year, Tesco, Asda, Sainsburys and Morrisons reported pre-tax profits of £3.5 billion; £803 million; £827 million and £632 million respectively. Their executives and CEOs revelled in the bounty with individual remuneration packages ranging from £3m to nearly £7m.

Yet, according to our study, 86 per cent of employees (interviewed across four regions and 32 stores) are not receiving either the London Living Wage, or, outside of the capital, the UK Living Wage. More than half said they didn't earn enough to live on, with nearly a fifth that they could no longer afford new shoes or clothes for their children.

British politicians are falling over themselves to endorse living wages. Boris Johnson says it is "not only morally right, but makes business sense"; and David Cameron has claimed that the concept is "an idea whose time has come". So why do the Big Four maintain a corporate culture that seems designed to hard-wire a low-paid, low-skill culture into the labour market?

One answer is their economic (and political) omnipotence. The Government increasingly needs them to pick up the tab for rising unemployment. Answering Cameron's appeal at his No 10 "jobs summit", Sainsburys has committed to creating 50,000 new jobs by 2020, and the smallest of the four, Morrisons, has announced 7,000 places this year. But this plan is chronically short-termist. The cost to the state of subsidising low pay with tax credits and housing benefit, and the cost to local economies of the enlargement of low-paid employment is huge.

Reliance on corporate giants operating unethical pay structures is not just socially or morally undesirable, it is economically unsustainable. It should be unacceptable that a handful of gigantic operators enjoy colossal profits, low corporation tax and vast executive pay packages, while paying basic rate employees a poverty wage.

The long-term prognosis is even worse. Seventy-seven per cent of workers interviewed said their supermarket had not offered them training for a better-paid role, and only 18 per cent were covered by an employer pension scheme. The orchestration of wage stagnation and insufficient provision for retirement on this scale will bite the UK economy just as hard in the future, as it bites every checkout operator or shelf stacker in the hourly, daily, weekly present.

Mark Donne is co-author of 'Face the difference: the impact of low pay in national supermarket chains' for the Fair Pay Network