After heavy criticism, Amazon has declared that it will be increasing the wage they pay their American and UK employees. This means that more than 40,000 UK staff will see their pay rise to £9.50 or £10.50 if they live in London, an increase from the basic of just £8 an hour currently.
But while the positive PR announcement might seem like a step in the right direction Amazon may have a few more critics to answer when they look behind the headlines at what this increase really means.
Previously, the average gross wage on offer for an Amazon employee was just £16,640 based on £8 an hour, eight hours a day, five days a week for 52 weeks of the year. With mortgage eligibility calculated at four times the average wage, this meant an Amazon employee could get on the ladder for £66,560. This was woefully short of the average house price in every single London outcode but has the 31% pay increase made a difference?
Now an Amazon employee working in London can take home a gross salary of £21,840 but again at four times this, their mortgage eligibility reaches just £87,360 and is still nowhere near enough to climb the ladder across London.
But the unaffordability of the London ladder is one that stretches beyond Amazon so how does the pay rise stack up in the rental market?
Before the pay increase and after tax, the average UK Amazon employee had £1,152 left from their pay packet. That’s enough to rent in just 6% of London outcodes providing they have no other outgoing and can survive on oxygen for the month.
With the pay increase, this monthly take home will increase to £1,424. The good news is that on the same basis, their rental potential increases substantially but again, they are only able to afford to rent in 40% of London outcodes with next to nothing, or literally nothing, left to live on.
Founder and CEO of Emoov.co.uk, Russell Quirk, commented:
“A clever bit of fluff from Amazon and on the face of it, good news for their employees, particularly those working in London who are exposed to a much higher cost of living.
But the fact of the matter is, that while Amazon fiddles the books in order to avoid paying its fair share, hardworking members of the UK public who contribute through taxes are struggling to make ends meet on Amazon’s paltry wage.
Getting a foot on the ladder is no easy task for anyone living in the capital, but this pay increase is barely allowing Amazon employees to remain in the rental market. In fact, the reality is that they can’t actually afford to rent in 40% of outcodes as if they did, they would be left with no money for food, clothes and other day-to-day essentials.
Of course, it isn’t as clear-cut as these individuals living in single occupant accommodation and they may have a partner, they may rent a room, but what we want to highlight is the ever-growing gap between earnings and house prices and the failure of one to keep pace with the other.
It would be great to see a company of Amazon’s influence lead the way on the issue rather than provide an insignificant gesture in order to tick a few public relations boxes.”