Living wage in the retail sector (BMO GAM)

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The way we shop has changed radically over the past decade. The growth of low-cost online retailers has put unprecedented pressure on the margins of high street stores. Many have had to respond by cutting costs to stay in business, which can mean squeezing the wages of workers and of those in their supply chains.

The short-term alleged cost benefits of a low-wage strategy need to be weighed against longer-term costs. Poor wages can result in higher worker attrition and lost productivity, not only from depleted morale but also a constant need to train new starters.1 This in turn can lead to a decline of the in-store shopping experience, further damaging the business prospects for high street retailers.

Promotion

Our engagement on living wages has sought to bring companies’ attention to these less immediate issues and encourage them to take a progressive long-term strategic approach to human capital management, which recognises the benefits of a stable and motivated workforce. This engagement supports various Sustainable Development Goals (SDGs), the strongest links relating to SDG 1 – No Poverty; and, in particular, target 1.2, which relates to halving families living in poverty; and SDG 8 – Decent Work and Economic Growth, within which Target 8.5 focuses on decent and productive work for all. In addition, given that women are often disproportionately represented in low wage jobs, engagement on living wages also supports SDG 5 – Gender Equality.

 

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