Managers admit buying from factories that fail to pay the minimum wage
A fifth of British companies have found they use suppliers who are either paying their staff late or at illegally low rates, a survey has found, raising further concerns about the treatment of vulnerable workers.
Suppliers to one in 10 British companies are failing to pay the minimum wage, according to a survey of managers for the Chartered Institute of Procurement & Supply.
Industry figures said they expected such abuses to get worse as a result of Britain leaving the European Union when companies are likely to squeeze their suppliers even more to cope with rising costs. Further rises in the minimum wage could also encourage bosses to break the law.
There are already concerns about insecure employment practices, with more work contracted out to workers who are not officially recognised as employees.
The government’s adviser on enforcing labour laws has renewed his call for measures to stop the violations. David Metcalf called for new powers to seize goods temporarily, more pressure on big brands whose suppliers are acting illegally and stricter rules to ensure no public money goes to companies whose suppliers are breaking the law.
Metcalf said that he expected to find some “major issues” in his investigation into practices in the hotel, warehousing and restaurant industries. The findings will be published next year. “We are going to go into this in depth,” he said. “I suspect that when we start turning the stones over, we’ll find one or two things that are not as they should be.
“This is a serious problem and if the government were to adopt the measures that we propose on supply chains in our strategy, it would be helpful in tackling it.”
The institute’s survey of more than 800 supply chain managers found that 21% of them have seen wage violations over the last two years, with 14% finding evidence of staff being paid late and 10% seeing staff not being paid the minimum wage.
More than half of those who responded (53%) were in favour of naming and shaming companies whose suppliers were found to be breaking the law.
Rises in the minimum wage have helped millions of workers since its introduction in 1999, when it was set at £3.60 an hour for most adults. It has since risen to £7.83 for people aged 25 and over, falling to £3.20 for apprentices.
However, the increase has been accompanied by a rise in the number of people complaining about being underpaid. Complaints reported to HM Revenue & Customs doubled from 2,513 in the year to April 2016 to 5,053 a year later. Many more cases are thought to go unreported.
Cath Hill, group director at the Chartered Institute of Procurement & Supply, said: “The vast majority of British businesses would agree that short-changing their employees is inexcusable, but when it comes to the workers further down their supply chain they don’t have the same level of concern.
“Too often it is the people at the bottom of the supply chain who feel the pinch. As a country we must take meaningful action against businesses who reap the benefits of worker exploitation in their supply chain.”
A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “Any employer who breaks minimum wage rules and short-changes their workers can be hit with fines and public naming, as well as having to pay their workers the back pay.
“Last year government investigators identified £15.6m in back pay owed to 200,000 minimum wage workers.”