Exposing the Corporate Hypocrites

20150807_100728A key concept in modern marketing is that of Brand Promise: the commitments made by a company that seek to align it to the expectations and preferences of its target market, to provide competitive advantage.

In particular, some companies seek to position themselves as “ethical”, whether in relation to avoiding controversial business sectors, such as guns, tobacco and alcohol; or by making commitments to avoid exploitative abuse of workers, either their own direct employees or in their supply chain.

Of course, any employer should be congratulated and encouraged in treating its employees with fairness and respect, and in ensuring that similar fairness and respect is observed in its supply chain. However, all too often we see the phenomenon of companies masquerading as ethical, while actually tolerating exploitation and abuse of workers, either by its own managers or by its contractors and sub-contractors.

In my personal experience one of the worst at pretending to be angels while actually behaving like sharks is Marks and Spencer. GMB has issued an open letter to M&S CEO, Mark Bolland over the issue, and we await his response. A recent BBC Radio Four  programme (17 minutes 40 seconds in) exposed the abuse of the so-called Swedish Derogation at M&S’s Distribution Centre in Swindon. This legal loophole allows employers to avoid their obligation under the Agency Worker Regulations (AWR) to give equal pay to agency staff. The legislation derives from the EU, and member states have legally binding treaty obligations not to allow avoidance techniques, and Britain’s implementation of the AWR is already subject to a formal complaint to the EU commission that it promotes such avoidance. As such, no genuinely ethical employer would push down costs in their supply chain by contracting out their distribution chain to companies who exploit agency workers through use of such a contested loophole. Yet that is exactly what M&S do in the UK, and GMB is currently assisting 240 members in taking cases through Employment Tribunals, all of whom work in M&S’s supply chain.

Another particularly pernicious example of a company hypocritically claiming to be an ethical employer, while actually acting in an exploitative manner is the Nationwide Building Society, and GMB recently staged what will be the first of many protests outside Nationwide high street branches.

The Living Wage campaign admirably seeks to ensure that employers pay a sufficiently high wage to allow their workers to live in dignity, which is calculated to be £7.85 per hour outside London. Nationwide Building Society advertises itself proudly as one of the Principle Partners of the Living Wage Foundation. Yet cleaners and security staff at Nationwide, who work for Carillion, have been refused the living wage, as Nationwide declines to provide the necessary uplift to the contract to allow their contractors to pay the living wage. In fact, these workers are paid little more than the national minimum wage of just £6.50 per hour.

Stephen Uden, Nationwide’s Head of Corporate Citizenship, who cut his teeth at Microsoft, wrote in 2014 “In lots of companies there are these almost invisible staff who serve you a coffee in the morning or the cleaner I see when I get into the office at 7am. And it is those people that work for Nationwide that we feel should be appropriately rewarded whether they are directly working for us or not.

Let us be clear: Nationwide is accredited as a Living Wage company, but does not in fact pay the Living wage to those who do not directly work for it. They advertise themselves as a Living Wage employer, and consumers would therefore be misled into thinking that Nationwide has no employees – direct or indirect – earning less than the Living Wage.

Nationwide makes a weasel argument that in the small print of the Living Wage Foundation code of practice, employers have three years to introduce the living wage for contractors after signing up for it. Nationwide follow the letter of these rules and  yet act completely outside the spirit, because they could afford to pay the living wage to contractors, and yet they simply choose not to. (It is also worth questioning the “ethical” stance of Nationwide in even employing Carillion as a contractor, who are a company who have been up to their necks in the scandal of unlawful blacklisting)

Surely the Living Wage Foundation should not allow any employer to misleadingly claim to be a Living Wage employer until they actually are paying the Living Wage? Surely consumers would be surprised that an employer can proudly advertise that it is a Living Wage employer, and pontificate about the plight of “invisible” workers, while still choosing not to pay those same workers the Living Wage for a whole three years?  In fact declaring themselves to be a Living Wage employer, but not extending that to contractors, was arguably a largely empty gesture by Nationwide, as I am informed that the overwhelming majority of their directly employed staff were already paid that amount, or more.

This also raises the question of what role trade unions should play in bodies that support companies in claiming ethical credentials. For example, Marks and Spencer subscribes to the Ethical Trading Initiative, which also includes international trade union bodies, and at this year’s GMB Congress I successfully moved a motion that GMB would seek – through its own international affiliates – to challenge the possible misuse of companies like M&S of so-called ethical endoresments to provide a rubber stamp, while their actual activities may be questionable.

The TUC also sits on the Living Wage Foundation advisory council, alongside Stephen Uden of Nationwide. While it is important that trade unions encourage companies who seek to act ethically, trade unions also need to ensure that we are not co-opted into what becomes a whitewash industry, and that means that we need to be prepared to act independently and call out hypocritical employers.

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