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BrewDog To Scrap Real Living Wage

In a letter to staff, BrewDog CEO James Watt announced real living wage cuts for new starters moving forward. They’ll still receive the government’s National Living Wage, which is currently at £10.42 an hour and is set to increase to £11.44 an hour in April this year. The pay uplifts will see wages rise by a record 9.8% - a modest jump from last year’s 9.7% bump. 


Since 2014, the craft beer giant has been among 14,000+ UK businesses that voluntarily pay the real Living Wage set by the Living Wage Foundation. Rates are calculated independently by the Resolution Foundation and monitored by the Living Wage Commission based on the most up-to-date research into the standard of living in London and the UK. Companies that opt-in pledge to pay their staff a wage that the foundation believes “meets everyday needs” from grocery shopping to unexpected dental bills. This has typically been above the mandatory National Living Wage. 


However, starting 1 April 2024, BrewDog will no longer use the real living wage to establish earnings for hourly-paid staff but will instead use the standard National Living Wage. Those aged 23 and over working outside of London will still see a pay rise from the scheme’s present £10.90 rate to the national £11.44 rate per the government’s increase in April. But new staff joining before then will start on the national £10.42 an hour. For those working in London, pay will remain unchanged at the foundation’s present rate of £11.95, which Watt emphasises is still 4.5% above the uplifted National Living Wage. However, starting April, it will fall below the new £13.15 an hour to be paid by accredited employers under the scheme, effectively freezing hourly pay for London-based staff. The letter goes on to state that other benefits won’t be affected. This includes a bonus scheme for “exceptional customer service” where staff receive an extra £1 an hour and a 10% profit share scheme calculated according to hours worked.


 


With this change, BrewDog has once again found itself amid controversy. Unite’s hospitality organiser, Bryna Simpson, said, "To withdraw the real living wage now, during the most acute cost of living crisis in a generation is outrageous…We are already working with our Brewdog members across the country to collectively challenge this awful decision and force the senior management of the company to do the right thing by the workers who have made them millions." Others have also expressed their views on X, formerly known as Twitter, with one person noting, “James Watt Brewdog's CEO is worth £262m [yet] he is refusing to raise the wage of his staff in London by the £1 an hour to keep them at the National Living Wage”.


Watt later defended his decision on the social media platform, saying: “Since March 2022 we have increased the wages of our UK bar teams by a huge 20.4%, this is well ahead of most industries and almost all of our competitors”. 


“...We remain fully committed to investing in our people, putting together packages which are well ahead of our competitors”.


In the letter, he referred to “hard decisions” necessary to “get this business back to profitability”, citing trading losses in 2023 and attempts throughout the year to cut costs. BrewDog had set its sights on an IPO, possibly in New York or London, but a backdrop of reputational hits has hampered plans. 


In 2021, a group of former BrewDog employees - calling themselves Punks With Purpose - penned an open letter to the company alleging a “culture of fear” and a “toxic attitude” toward junior staffers. Additionally, Watt faced allegations of inappropriate behaviour and abuse of power at work. This resulted in the company losing its B Corp status. 


Responding to the pay cuts, Punks With Purpose posted, “BrewDog management’s decision to revoke a long-standing commitment to the real [Living Wage] proves that there is no principle too dearly held for them to abandon. The real Living Wage has been a cornerstone of BrewDog’s public identity for years.


The brewery also faced criticism during the 2022 World Cup after launching an anti-sponsor campaign - dubbed the “World F*Cup” - that was deemed “disingenuous”. Although it donated profits to charity, its outlets continued to show the World Cup. 


BrewDog’s real-term pay cuts could indicate a broader economic trend, specifically the reduced wage pressures across the UK following a year of growth at a record pace. Still, this is in nominal terms, and wages continue to be outpaced by inflation. For this year’s outlook, annual wage growth will be key for Bank of England rate-setters. Further movement may be necessary to quail inflation (which is expected to remain persistent) and stabilise demand. According to Indeed’s 2024 UK Jobs & Hiring Trends report, private sector wage growth closed in 2023 at 7.7% year-on-year. BoE expects this to ease in 2024, closing at around 5% by the end of the year.


 


Edited by: Kaiyah Ellison


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