Delivering Insecurity – the Boom in Online Retail and its Impact on Workers

There’s been a bit of interest recently in the poor service and exploitative working conditions offered up by delivery companies. Yodel and Hermes are in the frame right now, courtesy of C4 Dispatches, The Times and The Guardian, which have put undercover reporters into the companies.

One driver at Yodel told the Times: “There’s no holiday pay, no sick pay, you have to work six days a week, and average about £200 a week…There’s no fuel allowance and if your vehicle breaks down you’re out of work.”

Yodel delivers for Tesco and Sports Direct, among others.

At Hermes The Guardian found that ‘Britain’s second-biggest parcel company, Hermes, which delivers for John Lewis and other major retailers, is paying some of its couriers at levels equivalent to below the national living wage according to a snapshot of information provided by some of those who have worked there.

‘In common with several delivery firms serving the internet shopping boom, Hermes does not need to pay its couriers the £7.20 an hour living wage introduced in April because they are self-employed. The arrangement is legal and is approved by Her Majesty’s Revenue and Customs.’

These stories are pitiful and the employees are to be pitied. They are stuck in dead end jobs where their jobs do not just enable the companies to make money, but are actually a revenue stream of their own where the value of their work goes almost wholly to the company and not to them.

So far so appalling. Two things however are lacking in the ways in which this burgeoning workhouse industy is discussed. One is history – how did it get to be so bad?

The other is ownership. Who, finally, is exploiting these British workers so shamefully (and providing a dire service to customers as well).

These two questions are obsessing us at New Weather and we’ll be coming back to them in the early autumn. But for the moment delivery companies – servicing the new online world – are a good place to start.

Let’s step back in time. Not long, just to 2008 when the then Labour Government commissioned a man called Richard Hooper to look at Royal Mail with a view to part privatising it. Hooper duly obliged and Peter Mandelson tried to sell off Royal Mail as a consequence. He failed but the stage was set for the final sale of Royal Mail (Kuwait now owns much of it) by the 2015 Tory Government.

The arguments used then have resulted in the fractured ‘get rich quick’ delivery market today. It was promised to lead to greater efficiency and modernisation. Instead it has led to gross exploitation of workers, and indifferent services by delivery companies where instead of modernisation we have a lot of throwing parcels over hedges, and notes saying how sorry the company is that we weren’t in. When we were.

The privatisation agenda of our past three Governments in terms of Royal Mail is directly responsible for the practices of these companies.

But the owners of the company are too. And these owners are rarely hands-on owners. Rather they tend to sit at the top of very elongated structures consisting of acquisitions designed to bump up a share price, or fatten for a Stock Exchange listing, or a takeover, or as a tax dodge. A company which is doing badly can be set against tax, fulfilling a function rarely mentioned by privatisers.

So Michael Otto, a 74 year old German billionaire is the human who, with his family, finally owns Hermes. His group is doing pretty well. This from the Otto Group annual report:

‘The Service segment’s logistics and service activities, which are dominated by the Hermes Group, reported strong growth of 15.3 per cent, climbing from 1.594 to 1.838 billion euros. This growth was once again driven mainly by Hermes’ business activities in Great Britain, although Hermes saw clear growth in Germany too.’

Yodel, which makes a big loss, is owned by the Barclay Brothers, usually described as ‘secretive’, who own The Daily Telegraph and live shielded from public gaze, in a weird castle on a Channel Island. Their companies enjoy tax structures inadequately described as Byzantine.

And finally, here is how Royal Mail, a company set up for the public good, still manages to treat its workers, according to the not always complimentary Communication Workers Union.

‘Royal Mail currently sets the high benchmark for pay, terms and conditions, but the wider postal industry, and particularly the parcels market, is rife with insecure employment models from zero-hours and short term contracts, piece-rate pay below the minimum wage, bogus self-employment and a lack of basic rights (from holiday and sick pay to pensions). This comes at a cost to the public through poor service standards and the welfare system and puts pressure on companies like Royal Mail to join a race to the bottom.’

Hack back the infrastructure of the State and people will suffer. It’s just that they won’t be Michael Otto and the Barclay Brothers.