Something fishy in this gender pay claim against Tesco

Earlier this week I ended up on BBC Radio Scotland (starting at 10:22) talking about the news that a £4bn claim had been issued against Tesco by its shopfloor workers because they had been being paid less than those in the company’s distribution warehouses. The contention of the legal case is that, with shopfloor workers (on average were more likely to be women than men) being paid a modal amount of £8 an hour, and warehouse workers (on average more likely to be men than women) being paid up to £11.50, that there was a case of discrimination by the company against women in favour of men.

Forget the fact that the claimants used a modal amount for one group and a top rate for the other, the question remains, is there a case of discrimination here? It is not obvious that there is.

Imagine that there are two companies. One specialises in warehouses and distribution, the other in running the shop floor. They both have a contract with an umbrella company who pays a sum to one and a separate sum to the other. Each provides a different service, which is valued at a different level because it is a different role and it means each receives a different amount of money.

That is, in essence, exactly what’s happening at Tesco. In a past life I used to visit distributors, met various wholesale groups and supermarkets. No supermarket in the UK owns and runs every single distribution warehouse for all the goods that they stock in store. Often these are run by small local outfits, or by packaging companies, or by importers who then supply into stores directly. Sometimes though supermarkets do have coordination sites, and these then supply into their main stores where shop workers place them onto shelves. It’s not a stretch of the imagination to say that each of these provides a different function to the company as a whole and each is valued at a different rate from one another. So it's not a stretch to suggest that the firm might value the work at its distribution sites differently to the work done in its stores. We know this because the price they pay for each service is different.

Ben Southwood argued back in 2014, correctly I might add, that:

“Employers are unlikely to consistently pay above productivity, because they'd lose money. But equally, they'll be unable to consistently pay far below productivity (less the share needed to rent the capital involved) because in a reasonably competitive market firms will compete their workers away with more attractive job offers.”

It's hard to say that supermarkets don't operate in competitive environments, and certainly different stores offer wildly different pay, terms and conditions in their stores and their distribution sites. It's also worth saying that there is no barrier on men applying to be shopfloor workers, and there is no barrier on women applying to work in the warehouse. If there is discrimination it's not coming from obvious barriers to entry for women. 

There are all sorts of reasons that add up to why there is a gender imbalance in the roles (and if Tesco is committed to parity as a corporate goal it might look into addressing there) and there is a good argument that shopfloor workers could make to say they deserve to be paid more by these profitable enterprises. But rectifying that is the job of negotiation, not litigation.