ANNUAL GENERAL MEETING
2012
MOTION AND RESPONSE DOCUMENT
1.
Motion from the Co-operative Group - Central and Eastern Region
Employee Remuneration
That this Annual General Meeting requests the Co-operative Group to
commission a report on:
1. The degree to which pay levels across the Group meet or fall short of
the living wage, as defined by the Living Wage campaign,
2. The costs and benefits to the Society of paying at least the living
wage to each of our employees,
with a view to developing a roadmap to move towards this goal in a
sustainable fashion.
RESPONSE:
The Co-operative Group is committed to ensuring that its employee benefit
package is broadly in line with market practice and is sustainable by business
performance. The Group has been supportive of the principle of a statutory
floor for basic pay and supported the introduction of a National Minimum
Wage (NMW). However, the Group has concerns about the commercial
practicality of supporting the Living Wage Campaign.
The NMW is currently set at £6.08 per hour. The current Food Customer
Services Assistant (CSA) rate is £6.25 per hour. The NMW is consistently
enforced, has improved the incomes of the lowest paid by providing an
effective floor under wages and, as a consequence, workers at the bottom of
the earnings distribution have seen their relative position improve.
The level of the Living Wage is currently £8.30 per hour in London and £7.20
per hour elsewhere in the UK .The approach to setting the level of the Living
Wage (which is defined as “a wage which would provide adequately for the
worker and their family”) has however, attracted some criticism. As a result,
the Living Wage has only been adopted in limited circumstances, where the
implications on both increasing costs and competitive pressures are not
significant. The Living Wage has not been adopted in market sectors where
the relative costs of meeting it are significant. A voluntary unilateral adoption
of the Living Wage risks an employer disadvantaging themselves against
competitors and hence damage the viability of a business. For these reasons,
to date, no large (in terms of numbers of employees), private sector employer
has adopted the Living Wage.
If the Co-operative Group were to adopt the Living Wage unilaterally, the
annual additional associated cost in base pay would be c.£52m. The Group
would also incur further costs in respect of employer on-costs (eg. pension
costs and currently unquantifiable costs due to the erosion of pay differentials
with jobs that are currently paid above the level of the Living Wage). Such
additional costs would have significant implications for the Co-operative
Group.
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It is the case that pay in the Retail Sector as a whole has long been and
remains comparatively low against other Sectors. Whilst the Group remains
supportive of the NMW, it does not necessarily regard this as setting the
wage at which the Group should pay its employees. The Group, through its
relationships and pay and conditions bargaining arrangements with USDAW,
is very conscious of its responsibilities and obligations to its employees. The
Group’s CSA employee benefit package currently includes; staff discounts,
flexible and part-time working, Employee Member Dividend and a defined
benefit pension scheme. The Group also continues to invest in its employees
and remains committed to providing them with training and development
opportunities. The Group has also committed to providing Apprenticeships in
support of the Government’s initiative for young people.
The Co-operative Group believes that continuing with – and further
developing – the above approach will serve the long-term interest of its
employees effectively and sustainably, whereas the unilateral adoption of the
Living Wage, as currently defined, could prove detrimental to the interests of
the Group and ultimately the employees it seeks to benefit.
Discussions are planned, initially involving the Group Executive and
eventually the Group Board, relating to pay scales for store staff and it is
proposed that the issue of the Living Wage be considered as part of this
review, with a view to reporting back at the Half Yearly Meeting.
Therefore the Group Board supports the Motion to commission a report but
does not believe that it should anticipate the outcome of the findings.
2.
Motion from the Co-operative Group – Scotland and Northern Ireland
Region
Improving our Food Store Proposition
The re-branding of the Group and the restructuring of our stores and
distribution network have brought welcome improvements to our large
portfolio of stores. However, those stores still score poorly in publicly
available surveys for their relatively high prices and the variability of the store
environment. Despite the wider public understanding of our values and
principles, as reported in the recent update to our Ethical Operating Plan,
there is a clear danger that the views of our existing and potential members
and customers are being affected negatively by their day-to-day experience of
our stores.
If the goals of the Ethical Plan reboot (2012-2014) are to be achieved, then
we call upon the Group Board to consider ways in which it can redirect more
of the Group’s resources towards our stores in order to better meet the high
expectations of our members and customers.
RESPONSE:
The Food business invests a high amount of capital in its stores. Every store
now has a property strategy through the ‘Strategy for Every Store’ initiative
which drives every property decision, involving significant additional
investment over the next two years. This includes increased activity in
acquisitions / relocations and redevelopments of existing stores.
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In 2010 and 2011, £300m was invested in both refitting and replacing assets
past their life. In 2012 a further £90m is being invested.
A further £45m was invested in 2010 and 2011 on acquiring, re-developing or
extending existing stores. A further £75m is being invested in 2012.
There is also a large amount of focus currently on availability and customer
experience in stores:
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Focus on availability through SMART - Availability is at an all-time high,
including a significantly improved performance on NOOSE lines.
Customer satisfaction – Facilitation of a move to store-by-store customer
satisfaction measurement. Currently being piloted, which will form part of
the Store Manager Bonus package.
‘Fix the first aisle’ initiative - High operational focus around fresh
departments supported by briefings and training. Significant progress in
this area already in the last six weeks.
Customer service – Focus on creating friendly and efficient service
through improved queues and customer interaction.
Our price comparison to Tesco has improved considerably in 2012 as a result of
a number of activities, namely:
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Significant investment into reducing prices in our larger stores matching
Tesco on a range of 300 products.
Value improvement through range and New Product Development changes in
areas such as Simply Value.
Increased investment in key media channels to promote the value
proposition.
New promotional strategy - promotional strategy of driving ‘Fewer Deeper’
promotions is helping to drive our value perception.
Currently trialling moving a number of stores from price band 2 to price band
1 to measure sales uplift and customer reaction.
In addition, the work Group marketing has been undertaking on our Customer
Strategy will help play an important part in driving our store proposition in future.
Therefore the Board supports Motions but wishes to re-assure members that
significant attention and resource is being devoted to improving the proposition.
Co-operative Group Limited, New Century House, Manchester, M60 4ES,
Registered Number 525R
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