Amazon Pay Rise: prime time or too little too late?

Amazon has confirmed it will raise minimum pay for warehouse staff and delivery drivers by 9.8%, two months after it was criticised for its alleged response to trade union membership.

The payday jackpot will bring the minimum wage for the ecommerce giant’s frontline workers to at least £13.50 per hour; 95p more per hour than the UK National Living Wage. It means that the minimum annual salary for full-time workers will be £28,000.

For years, Amazon’s domination of the ecommerce industry has been marred by criticisms over its treatment of employees. It will now be hoping that the pay windfall can serve to silence critics, and kickstart a new culture of positive employee-employer relations.

Amazon Pay Day

This recent pay hike is one of Amazon’s most generous yet. As well as raising the starting wage for new hires, the change means staff with at least three years’ service will earn between £13.75 and £14.75 per hour.

Amazon said, “we are increasing our minimum starting pay for all frontline employees [and] we continue to offer industry-leading benefits from day one.”

This is not the first time that Amazon has raised pay for its workers. In 2023, the company increased the minimum hourly rate to at least £11.80; its second pay hike in just six months.

In fact, conducting pay reviews has become a go-to move at Amazon in response to union pressure. GMB, the union that represents Amazon workers, has taken almost 40 days of strike action over the past 18 months, in protest at what it sees as poor working conditions.

Good shop, bad shop

Amazon’s company history is a tale of two halves. On the one hand, it is an ecommerce colossus. Its core values emphasise customer satisfaction and operational excellence. Meanwhile, Amazon Marketplace has helped to launch hundreds of small businesses.

On the flip side, managing a global workforce of roughly 1.68 million people brings more than a few HR challenges, and has resulted in more than a few PR scandals.

Various trade unions have reported that Amazon employees work gruelling shifts, and face a significantly higher risk of injury. Despite repeated pay rises for full-time staff, there has also been complaints of low pay, particularly part-time and seasonal workers.

The GMB recently carried out a union recognition ballot at the firm’s Coventry centre, campaigning for a minimum wage of £15 per hour. It narrowly lost by 49.5% to 50.5%.

Amazon’s company values claims to foster a culture of innovation and an inclusive environment for all employees. But recent HR controversies mean it has not been living up to these values. Now, its pay announcement suggests it is throwing money at the problem.

Commenting on the pay rise, GMB organiser Rachel Fagan said: “This is too little, too late from Amazon bosses who have been forced to act by worker’s industrial action.

“Amazon’s reputation is in the gutter over its treatment of its own workers and now company bosses are trying to plaster over the facts.”

Lessons for SMEs

Whether or not a pay boost will be enough to silence Amazon’s critics remains to be seen.

GMB may not be impressed, but thousands still apply to interview at Amazon each year. It was voted the top tech company where people want to work for 2024.

Amazon’s monopoly over the ecommerce market explains why its recruitment drive has not been impacted by the controversies. But for small businesses, for whom reputational damage can be far more disastrous, there is a lesson to be learned.

Amazon has allowed the situation with GMB to balloon. Its generous new pay package now looks to be a case of bowing to union pressure rather than genuine employer generosity.

Conducting regular pay reviews that are initiated by the employer, rather than staff dissatisfaction, will go further to convince workers you are an employee-focused business.

There is also the argument that money should not be the only way to win over staff. Amazon has raised pay multiple times since 2019, but its workforce challenges still remain.

Alongside wage hikes, more companies are rolling out attractive employee benefits to incentivise workers beyond salary and shape company culture. Prioritising wellbeing and investing in development can sometimes say more than a higher number in a pay slip.