Some two million UK workers are set to receive an automatic pay rise on 1 April, according to the Resolution Foundation. For on that day, the statutory National Living Wage (NLW) for workers aged 25 or over grows from £7.83 per hour to £8.21. [1] For full-time workers in that age group, that will amount to an extra £750 per year.


However, campaigners are still pushing for a voluntary, higher rate known as the Real Living Wage (RLW), [2] deemed to more accurately reflect workers’ most fundamental living costs. Spearheaded by the Living Wage Foundation, the RLW is currently set at £9 per hour across the UK and £10.55 in London. Big-brand employers that have signed up to the voluntary scheme include Aviva, Nationwide, KPMG and Ikea. But one firm that has signalled a reluctance to align itself with the RLW’s benchmarks is bookselling chain Waterstones.


In a 25 March open letter and petition, [3] hundreds of authors rounded on the retail brand for not paying its staff the RLW, telling its leaders: “Working for a rate of pay that is below the Living Wage results in booksellers who are stressed, preoccupied and who have little spare time and energy to devote to buying books, reading them, and keeping up with news and trends in the industry – all of which activities are undertaken outside contracted hours, and which many staff consider to be (and are encouraged to view as) integral to their role.”


The signatories noted: “As authors we recognise the vital role booksellers play in our literary culture and industry. Their skill, expertise and passion are a true asset and this deserves to be acknowledged both through public recognition and financial remuneration. We also recognise the huge amount of work and stress that goes into being the frontline to Waterstones’ business.


“We hope you will consider offering your Booksellers the financial recognition deserving of their skill, passion, expertise and hard work … It is in everyone’s interest that booksellers across the country are, as stated in the petition, ‘healthy, well-read, intelligent and insightful, and who have the time, energy and commitment to keep bookshops alive and thriving.’”


Finally, the authors added, “it has been brought to our attention that there is anxiety from current staff members about the potential for an increased wage being subsidised by staff redundancies or reduced hours. We wish to make it clear that authors will not support that as an outcome. A business that cannot offer a living wage to staff without redundancies or reducing hours is not a viable business model.”


In a response to the letter, Waterstones chief executive James Daunt said that the authors were “preach[ing] to the converted” – but pointed out that the brand had only recently returned to profitability after a period of financial strife.


“If you raise the bottom level really significantly,” he explained, “then everybody all the way up the company has to go up, and then we go bust, which isn’t very helpful. If we were to move to a significantly higher starting rate, then we would have to take that money from our more experienced booksellers, or cut costs in another dramatic way. We’re simply not profitable enough to wave the magic wand and shower gold all around.” [4]


Is Daunt correct with his pragmatic approach to the open letter – or does it simply bear out the authors’ contention that the business model is flawed? And if the latter is the case, what does that say about any leadership challenges the company may be facing?


Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “If you are not able to reward your staff adequately, then fundamentally, the business model is flawed. Now, that may have a range of possible meanings. For example, there may be insufficient demand for your products – or something wrong with how you manage your costs. Either way, it’s not really sustainable for employees at the lower end of the business to pay the price. So I would say that, in the former case, the people who think the product is worth buying have to pay more for it.


“It’s sad that in businesses to which customers have a strong, emotional attachment – and there is a lot of nostalgia for bookstores – these sorts of issues around basic pay are flaring up. It is only natural for authors to signal their interest in booksellers’ welfare, as those employees form a crucial liaison between writers and the buying public.”


However, Cooper notes: “In this particular industry, perhaps it is useful to contrast the experience of bookstores with that of libraries – which are also struggling to come up with an offer that is current, relevant and well used. While the funding mechanisms of these two types of outlets are different, there are questions to be asked about the commercial role of the physical book amid a near-constant tide of digital disruption.”


She adds: “Let’s not forget that other industries are in a similar predicament. In the past couple of days, a survey from the Early Years Alliance has shown that childcare providers across the UK are planning to raise their fees as a result of the statutory NLW’s rise. [5] But the fact remains that, regardless of the sector you operate in, if you are unable to pay your staff adequately, your business model is flawed and requires some reassessment.”


For further insights on the themes raised in this blog, check out the Institute’s resources on managing customer relationships


Source refs: [1] [2] [3] [4] [5]


Image of Deansgate, Manchester Waterstones branch courtesy of Alastair Wallace, via Shutterstock


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