Starbucks will pay all staff the new National Living Wage, alongside offering interest-free loans to cover rental deposits. It’s the latest company using the government’s controversial new policy to garner a whole lot of good publicity, in contrast to those that have publicly said the dramatic cost increase will seriously harm their business.
Starbucks’ basic barista pay will go up from £6.77 to £7.20 per hour when the NLW, which doesn’t apply to under-25s, comes into force next April. Supervisors are getting £8.72 an hour, a 52p pay rise. London staff will be paid an undisclosed ‘premium’.
The coffee shop chain, which has 770 stores in the UK, is also introducing a programme it’s labelled ‘Home Sweet Loan’ (a pun so bad it’s almost good). Following the lead of housing charity Shelter, it’s offering staff who have been with the company at least a year an interest-free loan to help cover rental deposits, up to a maximum of one month’s wages and to be repaid within a year.
‘We know the cost of living is a key concern for many, with the average rental deposit in England now is £1,226 [sic]. And with over half of our partners being under 25 years old, that rent affordability especially is an issue that affects them,’ Starbucks’ EMEA president Kris Engskov said in a statement.
Pressed on the cost of the policies by the FT, he would only say it was ‘a big investment’, adding, ‘This is about the competition… this is the most competitive retail market in the world and the most competitive coffee market in the world and it is increasingly difficult to find great people.’
The policy will only affect Starbucks’ company-owned stores, which are 60% of the total and employ 7,000 people, around 64% of whom are under the age of 25. Nonetheless, the move will put pressure on its franchises and competitors. Whitbread, which has almost 2,000 Costa Coffee stores in the UK, has already warned the NLW as it stands will result in a ‘substantial cost increase’ for the company.
It’s also a good PR move from a company that was dragged through the mud after a Reuters investigation in 2012 revealed it had paid just £8.6m in corporation tax on £3bn of sales, since coming to the UK in 1998.
Starbucks’ chief executive Howard Schulz said in June he wants ‘to run a business that combines profitability with benevolence’, despite being pilloried for his ‘Race Together’ campaign that aimed to spark discussions about diversity in the US. Across the pond, the coffee giant managed, finally, to post its first British profit in February this year. Helping out its euphemistically named ‘partners’ will no doubt speed up its transformation into a good corporate citizen.