Sports retailers abuse of their workers is something we cannot ignore

JD Sports, Birmigham
Photo Credit: ReissOmari

By Neil Patrick

This week has seen the humiliation of JD sports following an undercover investigation by Channel 4 into working conditions at its Rochdale warehouse. Conditions it described as ‘worse than prison'. Iain Wright MP, Chair of the Business Select Committee didn't mince his words either. He said the workers there were 'treated like scum'.

Unsurprisingly, both companies have been enthusiastic users of zero-hours contracts; a device excused by those who advocate flexible working policies, but which in practice is often a cruel instrument of low pay torture.

Only a couple of weeks ago, JD Sports was crowing about how its main competitor, Sports Direct, had seen a collapse in its share price following a similar exposé of appalling working conditions at its warehouse in Mansfield.

Some call this the unacceptable face of capitalism. Yet for all the hand-wringing and condemnation by everyone from trade unions and politicians to the media, this situation is not just caused by exploitative business owners.

Yes, the owners of these businesses, ranked amongst the UK super-rich are easy targets for criticism. This in no way condones their actions, but they are doing what business moguls do; building their businesses and their wealth (more or less) within the law. (Although I suspect that they will have to spend a lot more on lawyers and advisors in the coming months and years than they ever have before).

But almost everyone can play a part in changing things for the better.

In this particular sector of employment, this problem is enabled by the participation of five diverse groups with heavily vested interests. It's a chain of stakeholders. Each link in the chain is critical. Yet they share out the benefits between each other very unevenly.

Power determines who gets what…

So when we look at this dispassionately, there are many who are accessories to this situation. But what if instead of distancing themselves, these people decided to take some ownership and actually do something about this?

They have the power and it's time to use that power responsibly.

 1. Sportswear brands

There's a (mostly) cozy co-operation between brands who spend millions creating image and glamour for their products and retail chains who enable their distribution on a massive scale. Each needs the other. Brand investments essentially massively inflate the price that any item can be sold for relative to its cost.

Vested interest: The building of brand halos which enable goods to be sold at prices totally unjustified by their true value or utility. Yet brand owners can choose where their goods are sold...

2. Sports stars

These people take millions every year from sponsors in exchange for doing just what they do - pursue their sporting ambitions. They just have to display their sponsors' logos at every possible opportunity – particularly when they are competing. Their role is to help create the halo effect of the brands willing and able to pay what their agents demand.

Vested interest: Maximising their income when they may have a relatively short working life when they can earn money. Yet sports stars can choose to reject sponsorships - there will always be others...

Why would anyone want to top this list? Or need to?

3. Mainstream media

Without the mass appeal of sports events on TV and other media, the exposure of the sports stars in their branded garments is diminished. So big media companies are the last link in the brand value chain. And for them, televising sport is easy stuff. Much less difficult than say a costume drama or wildlife documentary.

Vested Interest: Access to hugely popular events which guarantee big audiences in exchange for relatively simple broadcasting and cheap production costs. Yet the media can make choices about which events and players it covers...

4. Consumers

There’s a paradox that most sales by these retailers are not made to active sports people. They are sold as leisure wear to the young and the poor. This is a group who are in love with the mythology of brands. Put a Nike tick on a garment and suddenly they will pay three or four times more for it.

Vested Interest: Easy access to fashion which they believe confers some of the brand’s status and value upon them. Yet consumers can choose to switch from one retailer for another...

5. Shareholders and investors

Investors seek profits. Only ethical investors concern themselves about how fairly those profits are achieved. But when something occurs like this which potentially causes long term reputational damage, almost all investors are quick to flee elsewhere. And sure enough, JD Sports share price has fallen off a cliff:

This time last year, JD sports traded at around £10.25 a share. Today, that figure is £3.16. So this group of stakeholders (ironically the most financially self-interested) have already voted with their feet.

 


This is not a free market where value is exchanged at a fair price. It’s a distorted market, where the powerful commercial players exploit those with less power.

But critically none of this could happen if even one link in the chain was broken.

Think about it if apart from investors voting against this, the other stakeholders did too:

Consumers refused on ethical grounds to buy branded sports wear? Thousands were quick to criticise Barclays in the 1980's over its willingness to operate in apartheid South Africa. A student boycott of the bank led to a drop in its share of the UK student market from 27% to 15% by the time it pulled out in 1986.

The media refused to televise any sport where advertising by unethical firms was displayed.  All television commercials for cigarettes were banned on the UK way back on 1 August 1965. Yet today, bailed out banks continue without challenge to print their names all over sportsmen and women.

Sports stars turned down sponsorship contracts? Or imposed ethical trading requirements on all sponsors? Footballers have been quick to support the outcry against child abuse by football coaches. Now all professional sports people have the opportunity to show they have some ethics too.


You might shrug and think none of this will happen. There are too many vested interests and there's too much money at stake.

But that sort of resignation gets us nowhere. Sure you can come up with a pile of reasons such changes cannot happen. But if you belong to one of the groups above, you have the power and the obligation I think to make a stand.

Whilst the media and politicians will doubtless continue to wag accusing fingers at the owners of these businesses, the truth is there are many more of us who are unconscious accessories. And we have a lot more power to change things than we might think. Especially if we vote with our wallets.

Why your next job contract may scare you to death

By Neil Patrick

We are inclined to think of our careers as a steady climb to a peak of success and personal fulfillment. That 's great from the point of view of a personal life goal. The trouble is that employers are rapidly abandoning any commitment to helping us do that. 

We're on our own and we're not climbing a mountain, we're riding a very rickety roller-coaster. But if we understand how employer thinking is evolving and practices are changing, then at least we have a better view of what's ahead and how we can survive the ride.

Today I came across an insightful piece on Forbes by Edward Lawler titled in perfect management speak, ‘Creating Talent Agility’.

It’s written for an audience of business and HR people, but it reveals much about how we can expect employers to treat employees in the future.

Warning: This post contains facts which some readers may find disturbing...

The reality is that there’s now a yawning gap between what employers are willing to offer and how employees define a good employer.

The traditional implied contract between employers and employees for most jobs was abandoned years ago. This isn’t because employers have become somehow more evil. It’s the hard realities of business in an ever more competitive global business environment. Lawler reminds us that this change is also accelerating:

“Organizations must be increasingly agile in ways that allow them to change what they do and how well they do it. Organizations have always had to change the skills of their workforce. The big difference today, however, is how rapidly this needs to happen and how much change needs to occur”.

Lawler goes on to describe three employer models and gives examples of who uses them and why. 

The traditional career employer

This is probably closest to how most people think an employer should behave towards its employees. It’s been around so long that it has become the default position for how most of us frame our expectations about what a good employer does.

It’s still used by some organizations including General Electric. Lawler describes it thus:

“Fundamentally, it relies on a career model of talent development and agility. Individuals are told that if they will commit themselves to a career at the company, it will “look after them” and be sure that they are trained and developed for tomorrow’s jobs. When new skills are needed, individuals are expected to want to learn the new skills because they know it is in their best interest for their long-term job security and career development.” 

The contractor-employer

The second category Lawler identifies is what I think resembles long-term contract work. There is no implied employer obligation to the employee beyond paying you. When your usefulness expires for whatever reason, you’re out. Period. This model is used by firms like Netflix, LinkedIn, and many other tech companies.

In Lawler’s words:

“It tells individuals that they will be well-paid and have a job as long as they can perform at a high level and do the work that needs to be done. There is no promise of a career, skill development, or job security. This approach produces low transaction costs when it comes to shifting the skill sets of the organization. Training is not required and terminations can be relatively easily executed without individuals feeling the organization has violated their employment contract.”

For workers who have highly sought after skills and the willingness to be highly mobile in their work, this model delivers high returns in exchange for a somewhat nomadic lifestyle. It’s great for a young tech worker, but almost unworkable for just about everyone else. 

Crowdsourced labour

According to Lawler, “Odesk and other companies have developed crowdsourcing technologies that allow organizations to buy labor that is willing and able to perform tasks for a contracted amount. In essence, the organization relies on outsourcing much of its labor and may outsource anything from a few hours to a few months’ worth of work. It is frequently used by companies that are looking for software development, but also for less skilled labor such as survey respondents and a host of more transactional activities. “

This model is closest to what has been termed “labour on demand”. Whilst Lawler quotes its popularity in the software development sector, in the UK at least, it has spawned a much more sinister variant, the ‘zero hours contract’.

Almost unheard of in the United States and mainland Europe, in the UK, looser government employment regulations have allowed firms to employ workers with no guarantee of the number of hours work they will get each month. It’s often an unequal contract in which the worker commits to availability for work, whilst the employer makes no commitment to actually providing any minimum number of hours of work.

For employers with highly fluctuating requirements for low-skilled labour, the zero-hours contract has been a godsend. Suddenly their workforce can be increased or decreased almost in realtime. At a stroke one of their major cost problems is eliminated.

But this isn't the end of the story. When we consider this development alongside the impact of technology on jobs which is deskilling some work and eliminating other jobs altogether, we get a glimpse of a seriously distopian future.

In an employment sector which was merely providing work for people who wanted to earn small second incomes, this would be a good thing. The terrible realty in a depressed jobs market is that this type of work has exploded and for many low-paid workers, it is the only work they can find.

From a small base of around 50,000 UK jobs in 2005, zero hours contracts have grown and grown. The Office for National Statistics (ONS) quotes that there are now a staggering 1.4 million zero hours contracts in use in the UK in 2014!

N.B. Here's a link to the latest (Autumn 2016) report and stats about zero hours contracts from the Office for National Statistics.

Of course the government loves zero hours contracts because along with the growth in 'self-unemployment', such ‘jobs’ allow the government to report falling unemployment. It’s spin and it supports the growth in wealth inequality.

Worse it’s now a feature of many ‘respectable’ firms’ employment practices. According to Wikipedia, one of the UK's largest pub chains, J D Wetherspoon has 24,000 staff, or 80% of its workforce, on contracts with no guarantee of work each week. 90% of McDonald's workforce in the UK - 82,000 people - are employed on a zero-hour contract. Britain’s biggest and most troubled supermarket chain, Tesco uses zero hours contracts.

A major franchise of Subway also uses the contracts, which state, "The company has no duty to provide you with work. Your hours of work are not predetermined and will be notified to you on a weekly basis as soon as is reasonably practicable in advance by your store manager. The company has the right to require you to work varied or extended hours from time to time." Subway workers are also required, as a condition of employment, to waive their rights to limit their workweek to 48 hours.

Boots UK has 4,000 staff on zero-hours contracts. Even Buckingham Palace, which employs 350 seasonal summer workers, now uses zero hours contracts.

My take is that hard cash will always trump elegant academic and ethical arguments in most businesses, most of the time. And since the cost of labour is usually the largest part of any business's operating costs, what we are witnessing isn’t a growth in employment options, it’s a relentless movement towards less and less secure employment and lower incomes for most people most of the time.