Amazon accused of cutting benefits to fund pay rises

Amazon’s much publicised pay rise for its lowest-paid workers is being funded in part by cuts to benefits, the GMB union has claimed.

This week the company, which was recently valued at over one trillion dollars, announced to much fanfare that minimum wage workers in the US will receive $15 an hour from 1 November, a pay rise of up to $7.75 depending on state.

In the UK, pay will rise from £8.20 an hour in London to £10.50, while outside London the rate rises from £8 an hour to £9.50.

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The pay rise applies to 250,000 employees in the US, 17,000 in the UK and tens of thousands of seasonal workers.

But, buried in the small-print of the announcement was the announcement that Amazon is to eliminate monthly bonuses and stock awards for warehouse workers and other hourly employees.

The company informed employees on Wednesday that it will cease to hand out stock award or monthly bonuses in order to help pay for the raises.

The UK-based GMB union says the removal of employee share and incentive schemes could cost some workers £1,500 in a single year, describing the move as “stealth tax on its own wage increase” and “a clear case of robbing Peter to pay Paul”.

Amazon, which refuses to recognise the GMB union, confirmed the incentives were being withdrawn but said in a blog post: “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs [restricted stock units].”

“In addition, because it's no longer incentive-based, the compensation will be more immediate and predictable” a spokesperson added.

CNN says Amazon has “come under fire from critics” who say that the company doesn't pay its workers enough, and “has also been attacked by campaigners for how much tax it pays”, says the BBC.

This summer also saw warehouse workers in Germany, Spain and Poland take industrial action during the internet retail giant's Prime promotion event to demand better working conditions.

Many have drawn a contrast between poor pay and dire working conditions with CEO Jeff Bezos' spectacular wealth: He is the richest person alive, worth an estimated $165 billion.

“The pay increase warded off criticism from politicians and activists, and put the company in a good position to recruit temporary workers for the important holiday shopping season,” says Bloomberg, but the timing has raised questions about the company's motivation.

The Independent says the announcement comes as the UK nears full employment, with the jobless rate at its lowest since the 1970s, “making workers harder to come by”.