At the start of the year, iconic North East bakery chain Greggs announced that following the success of their vegan sausage roll, they would be sharing some of last year’s rewards with their employees – £300 each, or £75 per quarter with the company for newer workers, a pay-out totalling £7 million. They were rightly met with commendation.
Companies give out performance bonuses all the time, but barely ever to frontline employees, the shop assistants and kitchen workers of the world. Its equal application meant that they would benefit disproportionately.
However, there’s always a catch. Five days later, benefit experts pointed out that, under the rules of Universal Credit, part of the extra income could be clawed back by the Government. In the worst case, that of a worker earning £12,500 per year, only £75.48 of the bonus would end up in their pocket. It’s not particularly surprising that something like this can happen. Universal Credit is a scheme riddled with cruelties, punishing workers for the most minor infringements by simply reducing their payment.
When it was introduced, the waiting times of over a month for the first payment led many into debt, rent arrears leading to eviction, and food bank use, with one food bank in Croydon, a trial council for the scheme, reporting a 97% increase in usage in the month it was introduced. The steep withdrawal rate of the benefit also means that in many cases those earning slightly more actually end up worse off.
There’s a particularly perverse irony to a system designed to “make work pay more” being one of the driving forces behind our country’s slide towards in-work poverty. No one claims benefits as a lifestyle choice; the constant demeaning of welfare recipients by both the media and successive governments over the last 20 years and the difficulty of proving you can claim them (with the added cost of making it to every fitness-for-work assessment) has made sure of that.
The fact is that, for many of us, work does not pay enough to live. Even with benefits, an eighth of workers in the UK earn below the Living Wage Foundation’s calculation of the cost of living.
It’s particularly galling, then, for an attempt by a company to give something back to their workers to be snuffed out like this, with the added insult to injury that this is effectively a tax on bonuses, something that this Government will gleefully apply to the worst off but fail to even consider imposing on the financial industry.
It’s telling that they consider a marginal tax rate for the highest earners to be disincentivising hard work, but taking away 63p for every extra pound earned for the lowest earners to be perfectly fair. Won’t someone please think of the bankers?
The current benefits regime is not sustainable, that much is obvious, yet the Government finds itself unable to accept the situation. The problems with Universal Credit are, as seen when this issue was raised in parliament, dismissed with a wave of the hand and some waffle about the highest ever employment rate, when it’s no use having one of the many jobs that can’t support even the most frugal lifestyle.
With the rise in the cost of living showing no signs of stopping, people need more money in their pockets, and it’s not fair just to dismiss those without enough money to live as simply lazy or not working hard enough – such an attitude belies a lack of understanding of the facts of some people’s lives.
You also can’t rely on every company being as benevolent as Greggs, giving out bonuses and 10% of their profits to employees – it’s the nature of capitalism that there is no financial incentive for companies to do this, so the vast majority simply won’t pay any more than they have to: not enough.
The Government has the power to change this, with a more compassionate and well-funded welfare system and a rise in the minimum wage to match the actual cost of living. With the Conservative Party claiming at the last election to be the party of the working class, whether it will or not is a sign of whose interests it really has at heart.
Photograph: Paul Dennis via Flickr