Amazon raises minimum wage in US, UK

By BLOOMBERG

LONDON • Jeff Bezos (picture) blinked. Bowing to political pressure, he announced plans yesterday to raise the minimum wage for all Amazon.com Inc employees in the US and UK.

Effective Nov 1, the company will offer US$15 (RM62.10) an hour to more than 250,000 current employees along with 100,000 more seasonal workers who will be hired during the holidays, Amazon said in a statement.

The hourly minimum wage in the London area will rise to £10.50 (RM56.30), and £9.50 in the rest of the UK, affecting some 37,000 current and seasonal employees, according to a separate statement.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” CEO Bezos said in the statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”

The e-commerce behemoth has been hit by lawsuits in recent years alleging that it has used contract employees to skirt regulations and cut costs in the US and abroad. Vermont Senator and former presidential candidate Bernie Sanders has charged that Amazon pays its workers such a low wage that many of them have to apply for public assistance.

Amazon said company lobbyists will also begin advocating for an increase in the US federal minimum wage, which has been US$7.25 an hour since 2009. Amazon’s new US wage implies an annual income of about US$31,200 for a 40-hour per week worker. The US income poverty threshold for a family of four is about US$25,000, according to 2017 Census bureau figures. Amazon’s move could encourage rivals to follow suit.

Earlier this year, Walmart Inc boosted its starting hourly wage to US$11 an hour. Target last year increased its minimum hourly wage to US$11, and will boost it to US$15 by the end of 2020. Costco Wholesale Corp and other retail chains like TJX Cos have also raised wages in recent years.

Analysts don’t expect the wage hike to have much impact on costs. “It may sound like a lot of money but in the context of how big Amazon is, it doesn’t move the needle a whole heck of a lot,” said Anthony Chukumba, an analyst at Loop Capital Markets LLC. He also said the move would help with employee retention.

Tim Roache, the general secretary of the GMB Union, which represents a few hundred Amazon workers in the UK and has been critical of the company in the past, said yesterday’s wage increase announcement was “a start”.

“I’m glad Amazon has heeded GMB Union’s long standing calls to pay people, at the very least, the minimum they need to live — though given their owner is the richest man in the world, you’d think he could see fit to dig deeper,” Roache said in a statement.