The butterfly effect

More than 7,500 people, including many customers, booksellers and authors, have signed a petition asking Waterstones to pay its staff the "real living wage". Set up by bookseller April Newton, the rationale is that poor pay results in staff who are "stressed, preoccupied and who have little spare time and energy to devote to buying books, reading them, and keeping up with news and trends in the industry". Whatever you think about the timing of this petition, and its targeting of a much-needed and only recently troubled high street bookseller, this should spark a wider discussion about pay.

The "real living wage" is distinct from the National Living Wage, introduced by the government in 2015 as a rebrand of the National Minimum Wage for those aged over 25. It is a legal requirement. The real living wage—which is voluntary—calls for rates of £9 per hour across the UK, or £10.55 in London, a 15% increase on the minimum wage of £7.83 (which rises to £8.21 from April). In its past fiscal year Waterstones paid £55m in wages, meaning that a rise of that extent, applied to all staff, would cost the firm £8m, halving its profits. The real costs, based on pay differentials that m.d. James Daunt is adamant reward career progression, would be higher. Daunt, who to his credit does not varnish the truth, says the business is not able to absorb such an increase: "We’re simply not profitable enough to wave the magic wand and shower gold all around." He is a supporter of the real living wage, calling it desirable.

An author-led petition in support is blunter, saying that "a business that cannot offer a living wage to staff without redundancies or reducing hours is not a viable business model". That is unfair. Waterstones is not the worst payer among high street booksellers—just two (smaller) book chains pay a higher average wage, and neither are profitable. I doubt, too, that it is the worst payer in the book business overall. Since it emerged from the HMV death-cult, it has returned a profit three times but at a margin of just 5% and, until its recent sale to Elliott Advisors, it was reliant on Russian money. In fact, many book businesses might struggle to pass a viability test: from subsidised small presses, to tech start-ups.

This is difficult stuff. By any measure Waterstones’ revival has been built on its more than 3,000 booksellers, many of whom have endured years of bad management, poor pay and uncertainty. Daunt gets the credit for the turnaround, but the Waterstones DNA that has proved so enduring comes from within its bookshops. Daunt’s promise of better times ahead will only take him so far, and a more imaginative approach involving employee profit-sharing or ownership may be worth exploring.
Waterstones should not be facing this issue alone—poor pay persists across the books sector, particularly at junior levels, where ambition to recruit inclusively is undermined by rates of pay that will attract only those who are already financially secure or enjoy parental support. That there are only two book businesses signed up to the real living wage shows the issue is endemic.