Thursday, 14 July 2011

Sainsbury's pay

I used to work for Sainsbury's.  I see from the Guardian that people are protesting the current wage levels.  It's tempting to point out how lucky they are (when I joined, I was on £2.73 per hour) but probably more honest to point out that they do have a perfectly good option.  If they don't like the pay there, they can get another job.  If enough people did that, perhaps Sainsbury's would up their wage to keep their staff...

Looking at the article, the main gripe seems to be that Sainsbury's makes a massive profit, so should pay more.  According to the London Stock Exchange website (no idea if that link will work - if not, search for SBRY on the site) they have a market cap of around £6 billion, and they're profits were £665m.  That's around 11%, which is higher than average, but not necessarily excessive (most projections I've seen reckon on 5%-9% being normal).

But suppose they're right, and the bosses are doing absolutely the wrong thing by keeping all these massive profits (and presumably using a certain amount to grow the business?), and the excess should be spread out amongst the staff.  First we need to determine what's the excess.  A return of 5% would be poor, and would mean lots of people selling shares (driving the price down further and thus calling into question the long term viability of the company, and incidentally costing anyone in the employee share plan lots of money, but never mind all that) but might be acceptable to the staff - that would give £363m or so to spread amongst the staff.

There are two ways the cash could be distributed:
flat amount to each member of staff
150,000 staff (from wikipedia) working out at about £2,420 each, or £1.19 per hour, taking them to £7.50 per hour.
according to their current salary
total wage bill was ~£2bn in (from here (warning: pdf)), so adding £363m would increase the total by 18% or so, so the basic £6.31 mentioned in the article would go up to £7.45 per hour.

Note that this is not what they can afford, it's the most they could give if they were willing to seriously risk the long term viability of the company, so asking for £8.30 per hour is not really reasonable.

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