Buy One Get One Free!

Twinkling brightly - but what did the Christmas
 lights really "cost"those involved in getting them 
into my porch? Was £6 a fair price or did it mean
that workers in China or in  UK warehouses had to 
work in unacceptable conditions for unfair pay?

The other day Pat I dug out the plastic boxes filled with our Christmas decorations, struggled in with the tree and decorated the house for the coming festive period. All was going swingingly until I came to put up the set of coloured lights that we always have in our porch. We have had this set for many years – certainly over 25 - and they have done good service......until, that is, Sunday morning! No matter what I tried the lights steadfastly refused to glow! In the end, and reluctantly, I had to accept the fact that a new set had to be obtained so off I went to the local supermarket. As Pat predicted it was crowded –“goodwill to all men” was clearly in short supply on the car park as disgruntled shoppers fought for spaces. After wandering erratically around the supermarket, I found the required lights and as there were only a few boxes left, grabbed a set. The notice above said "100 LED coloured lights £6.00 – buy one get one free" . I didn’t need a second set but grabbed one all the same and as I put them in my trolley it suddenly hit home – how cheap these things were. When I got them home this thought grew for when I put them up I discovered that they had various settings so that I could alter the patterns in which they lit up. We were delighted, but one has to ask the question how could they be sold so cheaply? “Made in China” the label informed me and I asked myself how could this clever bit of technology be produced, packed and shipped from China to the other side of the world and then be sent to supermarkets all over the UK for only £6.00 – less than the cost of two pints of beer at my local pub, or just a few pence more than a portion of fish and chips from my local fish & chip shop? Following this I ordered three air beds from Amazon for our grandchildren to use when they come to stay at Christmas. The items arrived a couple of days ago – and we are delighted with them – but again, I wondered how these things could be produced, shipped and retailed at the price?

I am not an economist nor do I pretend to understand the finer points of retailing but in the end, I know that things like these can only be sold at these low prices because of the use of technology and more particularly by paring costs back to an absolute minimum. And, in the end, this has to mean that those people who make the items are paid as little as possible. This fact was highlighted a few days ago here in the UK.

He really needed those trainers or tracksuit - or did he
just want them. Is it really Sports Direct and Mike Ashley
who are the villains - or is our insatiable desire for more and 
more stuff at cheaper and cheaper prices?

A week or so ago the Guardian newspaper published the results of an undercover investigation that they had been carrying out into the giant sports retailer Sports Direct. The company has been the subject of media speculation for some time following reports of poor management and especially of unacceptable working conditions for employees. The company is owned by Mike Ashley, a rather reclusive billionaire who also owns Newcastle United Football Club. The headquarters of Sports Direct is sited in a fairly poor area or north east Derbyshire, right on the Derbyshire/Nottinghamshire border. It is not many miles away from where I live and is one of the most deprived areas in the region, with higher than average levels of child poverty and numbers children eligible for free school meals. Historically a coal mining area the district fell into decline with the move away from coal and since then unemployment has been a significant problem. Things have improved slightly in recent months and years but despite this Shirebrook still continues to have a higher rate of out-of-work benefit claimants and a lower proportion of economically active residents than elsewhere in the region. In addition educational attainment levels in the area are low – for young children attainment is amongst the lowest in Derbyshire and at adult level there is a significantly higher proportion of adults without qualifications than in other areas. Absenteeism from schools is high and life expectancy is low. A significantly higher than average proportion of people have their day-to-day activities limited by health problems or disability. Mortality rates are considerably higher than average, with early deaths from cancer being particularly prevalent. In short, Shirebrook and its surrounding environs faces a multitude of obstacles. The east midlands of England is not a wealthy area by national standards and Shirebrook is very much at the lower end of all indicators of wealth and well-being in the east midlands as a whole.

Into this environment in recent years has stepped Sport Direct opening their huge warehouse at Shirebook. A year or so ago the Daily Telegraph reported:”Sports Direct .....has publicly fallen out with one of its two biggest suppliers, employs the vast majority of its workers on zero-hour contracts and has stores that resemble a jumble sale.....yet it has also been hugely successful. Last year its shares rose 86pc and its sales were up more than 20pc...... It entered the leading share index for UK companies in September and is worth more than £4bn. The secret to the company’s success lies in the Derbyshire town of Shirebrook, which, fittingly, is an unconventional place to find the headquarters of a FTSE 100 company. Sitting on a desolate piece of land on the outskirts of the town, which is near Mansfield, is Sports Direct’s enormous warehouse. On a wet winter day, the area feels like the coldest place in Britain, but this is the beating heart of Britain’s largest sports retailer”.

Mike Ashley at Newcastle United Football Club

Since the opening of the HQ at Shirebrook there have been a series of reports and allegations from a variety of sources about working conditions in the warehouse – the latest being the Guardian investigation. Following the Guardian reports there appears to have been an increasing anxiety amongst politicians, London’s City dealers and the stock market generally about Sports Direct, its management style and its treatment of employees. This anxiety has been further fuelled by recent less that wonderful financial results. So, the business that only a few months ago was being lauded as cutting edge, the brave business face of modern Britain is now looking a bit tarnished. When reporters have tried to contact owner Mike Ashley he has become even more reclusive and invisible than previously.

This week the Guardian (and other news agencies) printed similar headlines and reports:”....Sports Direct crisis grows as MPs and investors question business......City hedge fund boss Crispin Odey, a leading Sports Direct investor who had previously called the retailer’s founder Mike Ashley a genius, also turned on the billionaire. Odey said Ashley was “difficult to house train”..... [and]“dangerous”. Undercover reporters found how thousands of the retailer’s warehouse workers are subjected to a regime of searches and surveillance, while local primary schoolteachers also told the Guardian that pupils are forced to remain in school while ill – and at the end of the school day return home to empty houses – because parents working at Sports Direct are too frightened to take time off work. The company is “a scar on British business” said the Institute of Directors and the Guardian went on: “......Odey, a City grandee who had once been a major supporter of the company, said: “I have every sympathy for [the Guardian’s] exposés. In the fund I manage, I have personally reduced our holding substantially over the course of this year. That is partly because of the company’s problems in Austria and partly because Mike is a difficult animal to house train.....“I think he should address these issues, I really do......”. Even the government got involved: Business Minister Nick Boles said (in what appeared to be a pointed warning to Sports Direct and Ashley) “I don’t care how famous an employer is. I don’t care how well connected they are. I don’t care, frankly, how much money they have made. They need to obey the law. If they don’t obey the law, we will find them and disqualify directors if necessary.......”. And Labour politician Chuka Ummuna  branded the retailer as “a bad advert for British business” and said it had “a culture of fear in the workplace that we would not wish to see repeated elsewhere”.

Amongst the criticisms of Sports Direct were: the zero hours contracts and agency workers who are employed and have no security of employment or employment rights – they can be laid off at any time. Its asset stripping operations, the naming and shaming (over the warehouse tannoy system) of workers for not working fast enough and threats of being fired for things such as minor errors, periods of sickness, length of toilet breaks, use of a mobile phone and time wasting were also highlighted. Certain items of clothing are banned for work, and there is, it is said, “a culture of fear and intimidation”. The list of unacceptable employment practices also included the imposition of various sanctions which breach national wage requirements, the constant use of surveillance cameras to monitor workers all the time, only two short 30 minute breaks allowed in a nine-hour day, poor eating and refreshment facilities and a legally doubtful system of searching employees when they leave work and which means that in order to undergo the mandatory search they are detained on the firm’s premises without pay.

A miners' demonstration in  Shirebrook in 1907

My thoughts on reading all this was to wonder if we have changed very much at all as a society and an economy? If one goes back to the historical records of the Shirebrook area where the Sports Direct HQ is now sited it is easy to see parallels with today: ordinary workers being harshly treated by companies anxious to maximise their profits. A look at the records of the local coal mines of a century ago says it all:

I n 1898 Shirebrook miners were in dispute over the “top hard price list”. Price lists were an agreed schedule of prices at every colliery which was part of the contract of employment and could, if necessary be enforced in the courts. The men complained that the roof was bad and it was impossible to earn a fair wage on the price. They asked for an increase of 2d a ton and the removal of the under-manager whose treatment of them had become intolerable. After months of friction the men came out on strike on May 25th. Extra police were drafted into the village and the strikers received notice to leave the Company's houses or pay a fortnight’s rent in advance. On June 19th. the enginemen and firemen joined the miners, the firemen agreeing not to descend the pit under any other winders and the enginemen agreeing not to let down the pit any non-unionist miners. On August 8th. the surface workers ceased work. The stoppage lasted 17 weeks.

Over the years there were other disputes in relation to the nature of the work. It's difficult for us to believe nowadays, but in 1895 the men were told to use forks instead of shovels when filling their tubs. This was to reduce the amount of small coal each miner sent to the surface. Practices such as this were usually brought in when there was a depression and competition was high. It had the effect of increasing the profits of the owner at the expense of the miner, whose earnings were reduced. Over the years owners introduced forks with wider spaces between the prongs or screens or riddles which had a larger mesh to reduce the amount of coal sent to the surface by each miner and so it make it an even scarcer resource thus driving up the selling price while minimising the pay of the miners. An official, known as the "slack bobby" was appointed who would go around to ensure that shovels were not being used by the men.

The wide pronged forks
to ensure that miners didn't send
too much coal to the surface

The opening of a colliery at Shirebrook led to a massive increase in its population. The census figures for 1891 revealed 567 inhabitants. By the 1901 census, the figure was 6,200. People were arriving from various parts of the country looking for work. A village was built for the mine workers and their families, but unfortunately the houses were not being built fast enough to satisfy the tremendous growth in population. Some people had to live in tents and huts which were erected in nearby fields. This in turn led to health and hygiene difficulties. In 1900 a typhoid epidemic led to a heated discussion on sanitation. In 1910 Herbert Peck compared the death and epidemic death rates for various types of housing. At Barrow Hill houses were built in small blocks with large gardens and a free circulation of air, the death rate was 8.1 per thousand. But in other areas of the district where back-to-back houses were prevalent deaths occurred at the rate of 47 per thousand. In 1901, infant mortality reached 236.4 per thousand births. In the nearby rural village of Ashbourne at the same time the rate was 88 per thousand.

On the March 26th. 1907, there was a cage accident and 3 Miners Fell to their Death. William Edward Limb, aged 45, and William Phillips, aged 27. Arthur Burton, aged 36 were killed in an accident when the bottom conductor of the cage carrying the men down for the start of their shift at around 5.40 a.m.broke after about 150 yards and tipped out the three men sending them to their deaths at the bottom of the pit shaft. Two others were injured. There were 14 men in total in the cage which was vastly overloaded.

As one reads of the conditions of the miners and compares it with today there are depresing similarities. People desperate for work are employed in the most basic of conditions for the least possible pay and job security. The area is a poor area anyway where relatively few have qualifications and where there are few other opportunities for work. It is for precisely this reason that business men like Ashley site their operations in places like Shirebrook. They are often cheap to initially establish since governments - anxious for businesses to move to these areas and so provide jobs – lavish the businesses with various grants to encourage them. But, once established, the desperation of the local labour market more often than not ensures the company are able offer the minimum pay and working conditions and still meet their workforce requirements. Of course, it is true that Sports Direct and similar companies do in the end offer jobs where none were available before but the point is that they are only on offer because the situation dictates that people are forced to take anything on offer. People like Ashley would never site their businesses in (say) the wealthy Thames Valley where wages, expectations and other job opportunities flourish. He would have few takers for the jobs and the conditions that he offers. If he wanted to employ people in the Thames Valley (from where Ashley originated) then his labour costs would be huge and so would his running costs - in Shirebrook, however, he can become a billionaire "on the cheap".

One might say, well, the way Sport Direct operates is the way it has to be: people come to work to work not to chat, not to use a mobile phone or to waste time; there is clearly something in this argument. In the end, one might also argue, the business is not primarily in business to make life easy for their employees, they are there to sell goods and to make a profit. If the working conditions are too easy and lax then the company may well produce items that will not sell – and then everyone is out of work. That, of course, was the argument much used by the coal mine and mill owners of Victorian England.

A demonstration at Sports Direct with participants
dressed as workers from the past

But, as a society we have largely moved on and have different expectations. Throughout the twentieth century the move was towards a work environment that was efficient and demanding but also increasingly respectful of the employees providing various measures to ensure greater job security, appropriate refreshment facilities, a fair wages, various perks and bonuses to encourage goodwill and extra effort, or flexible hours so that family commitments can be met....... and so the list goes on. In the twenty first century, when disputes about the labour market arise it is not long before we hear the phrase “workers' or human rights” mentioned – this might be an overused and often misused idea today but in essence it encapsulates well the modern acceptance that the employer/employee relationship is a balancing act of rights and responsibilities. The employer has a right to expect a good day’s work but a responsibility to provide appropriate working conditions for his labour force. For the employee they have a right to expect to be treated fairly and in a manner considered acceptable whilst being subject to the responsibilities of giving a good day’s labour and meeting the requirements of the job.

Rescuers scramble to help those trapped in a Bangladeshi sweatshop collapse

 - the factory building was unsafe, overcrowded and overloaded 

as it produced cheap fashion items for shops like Primark and Bonmarché

Sadly, however, there is, it seems to me a loophole in all this: our modern consumer society’s overwhelming requirement that we want things cheap. It seems to me that every minute detail of the consumer society is increasingly concerned not with value but with cost. We demand more and more things and in order that we can satisfy our lust for more and more things we need them to be cheaper and cheaper. Gone are the days when people bought items to last a lifetime; now we change with the latest fashion or technology and so cost is crucial. Whether one calls it “retail therapy” or ”binge buying” the vast majority of us are hooked in some way. I did not need a new set of Christmas lights the other day – I just desired them. Next week my family and millions of families across the UK and the wider world will binge on gifts, food, drink, little luxuries for ourselves and our loved ones. And we all want it at the lowest cost. It is for this reason that the vast merchandising phenomena like Amazon or Sports Direct have grown. We can blame people like Ashley – we can consider them to be rapacious, fat cat wheeler-dealers who treat their workforce like animals – and, indeed it probably makes us feel better to deflect the blame for this situation elsewhere. But in reality we are all to blame. In economic terms, Ashley and similar companies are just filling an economic need, supplying a commodity at the price that the market dictates. We might hold our hands up in horror at the zero contracts and naming and shaming occurring in Shirebrook; we might wring our hand at the dreadful conditions in the clothes manufacturers in the sweat shops of Indian cities; we can decry the cheap labour intensive digital toy factories of China; or we can condemn the use of cheap immigrant labour picking the brussels sprouts in the fields of East Anglia for our bulging Christmas dinner table. But in the final analysis these things occur because we want to enjoy the life that we do. And we enjoy it largely on the back of and because of the misfortune of others.

We all loved our Christmas last year - but I wonder what its real cost
in human as well as monetary terms was? And without being flippant -
what did it cost the turkey? What sort of life did he have in order to be
served up on my plate at a cheap price?

This point was well made by the hedge fund manager Crispin Odey – and although I can despise his business and all that he stands for I can respect his honesty. He put it in a nutshell: “It’s that old question of citizen versus subject. Do you have any obligation to your people and to the community in which you operate? [Companies like Sports Direct and Amazon]...... don’t do anything for the greater good. They are all part and parcel of the new capitalism, which is quite cut-throat in the way it does business.........[and]we have to recognise consumers’ desire for cheap shoes is how you end up with these problems. Shoppers need to understand that these prices are only possible because every cost has been analysed and reduced as far as it will go.” Odey is exactly right – although it pains me to say it! We only get our pair of designer trainers or our mobile phone or our cheap shirt because “every cost has been analysed and reduced as far as it will go” : labour is bought as cheaply as possible from people who have no other option but to take the work for it is all that is on offer in an area of poor employment and few other opportunities. Just as the miners of yesteryear were “screwed” so too, our modern equivalents are also in a no-win situation.

And as I write this blog I wonder what was the real cost of my set of Christmas lights? Did it really cost only £6.00 to be made and to travel all the way from China and into my porch? Or was it rather more in terms of the hard work, life and working conditions of all those employed in its production subsequent retailing?

Happy Christmas to all!