LONDON — Labor shortages are forcing British businesses to hike wages to compete for workers, with Amazon offering joining bonuses of up to £3,000 ($4,140) in the run up to the festive period.
The e-commerce giant is currently advertising a number of positions around the U.K. that come with hefty cash bonuses. One role, for a temporary warehouse worker in the English city of Exeter, is offering a £3,000 onboarding bonus, while a London-based job with the company offers a signing bonus of £2,000. Many other roles in Amazon’s U.K. warehouses are offering welcome bonuses of £1,500.
Basic hourly rates are £11.10 per hour in London, while overtime pay can reach as much as £22.20. The average pay for warehouse workers in the U.K. is £ 10.16 per hour, according to jobs site Indeed.
Amazon’s aggressive hiring drive is reflective of a labor problem spanning industries all over the U.K.
Britain has an estimated shortage of 100,000 truck drivers, which has disrupted deliveries and led to empty store shelves, backlogs at ports and dry gas stations. Meanwhile, industries including agriculture, warehousing, food processing and hospitality have all warned of acute worker shortages.
Graham Sheen, secretary of the U.K.’s The Bonded Warehousekeepers Association, told CNBC Tuesday that there was a shortage of warehouse workers, particularly following Brexit.
“If you’re coming in from another country, you have to earn at least £26,000 to be granted a work visa — people who go into warehousing aren’t going to earn that sort of money,” he explained. “So they’re not going to go into warehousing.”
Sheen noted that other companies in the warehousing business would likely be forced to rethink what they were offering employees given the bonuses and pay rates on offer at Amazon.
“For other companies to try and reach that level, that’s a lot of investment for them, but it’s just something that they’re going to have to invest in, whether it’s bonuses or increased pay rates, which ultimately puts the costs up in order to get the best people,” he said.
The latest figures from the U.K.’s Office for National Statistics showed job vacancies reached a record high of 1.1 million between July and September.
Many employers, like Amazon, are offering financial incentives to attract employees. A survey of more than 400 U.K. HR directors published by Indeed Flex on Wednesday showed that almost half of companies had hiked wages faster than usual in an attempt to tackle labor shortages.
Alpesh Paleja, lead economist at the Confederation of British Industry which represents 190,000 businesses, told CNBC via email on Tuesday that labor shortages remained a challenge in many parts of Britain’s economy.
″Employers are using every lever they can to alleviate this issue, via targeted pay rises, boosting investment in training, widening their talent pools and stepping up investment in digital and automation,” he said.
Small firms struggling
Many smaller companies are unable to simply throw money at the problem and are struggling to compete with the likes of Amazon when it comes to recruitment.
“The number of small businesses who cite access to appropriately skilled staff as a barrier to growth is now at 38% — a five year high — with no sign of abating any time soon,” Mike Cherry, chair of the U.K.’s Federation of Small Businesses, told CNBC via email on Tuesday.
Julia Kermode, founder of IWork — an organization representing temporary, freelance and gig economy workers — told CNBC that labor shortages were so bad that the U.K.’s “army of temporary workers” were unable to meet the demand.
Several businesses around the U.K. told CNBC that they were having difficulty finding employees but couldn’t afford to raise wages after the pandemic.
Jo Bevilacqua, who owns a beauty salon, said recruiting qualified and experienced employees had become impossible.
“Many left the industry during Covid, not able to survive the constant lockdowns, or not wanting to deal with the pressure once the industry reopened,” she told CNBC in an email. “It worries me where the industry is going if more and more people leave to seek other opportunities — although we invest a lot of time and money into employee training and incentives, we cannot compete with the likes of Amazon with their £3,000 welcome bonuses.”
Adam Bamford, CEO of gift hamper company Colleague Box, also told CNBC he was seeing hiring pressure “across the board,” particularly for warehouse and packing positions.
“As a small business we can’t afford signing on bonuses for short-term contracts, and I understand why if you were looking for a job you’d take the cash,” he said. “The bonuses are often one or two months’ wages, which covers the period we’re looking to recruit for — so we’d essentially be paying double time all the time.”
Flexibility and ethics
Incentives other than pay are also coming into play.
According to Indeed Flex’s data, half of British companies were focusing on non-financial perks like flexible working hours to entice potential recruits.
Chris Sanderson, CEO of hospitality recruitment app Limber, told CNBC via email on Tuesday that the pandemic had created a disconnect between employers and employees, which had left many companies falling behind.
“Within the hospitality sector, for example, companies are struggling to recruit up and down the country because they have not adjusted quickly enough to the must-have requirements for many younger people after their experiences of the pandemic, namely flexibility, variety and control,” he said.
Kermode added: “It’s incredibly competitive, and many small businesses simply don’t have pots of money to throw at the problem. But money is not the be all and end all — people want to work with businesses whose ethics and values they agree with, firms that have a positive impact on the wider world.”
