Britain’s most famous high street retailer “M&S”, which has been going round in circles for years trying to fix its ailing clothing business, has come up with a solution which has embroiled them in a dispute. M&S is consulting staff over the axing of premium pay on Sundays, and cuts to the pay for bank holidays and for employees working anti-social hours. This potentially affects around 7,000 staff. It also plans to reduce pension contributions, which would hit 11,000 employees.

As per them, despite these changes it will allow the chain to deliver “some of the highest wages in retail”, while the pension changes will deliver “parity” to all employees. The employees who would not agree to the new contracts will be sacked. This is more troublesome for the staff because if they agree to this contract their monthly income in hand will be reduced and if they don’t agree they would be losing their job.

As a result of Britain’s fast-changing and ruthlessly competitive marketplace, many retailers are struggling to survive. According to the British Retail Consortium (BRC), a trade group, sales growth has been slowing since early 2015. There have been some prominent high-street casualties this year, such as Austin Reed, a menswear brand, and BHS, a chain of department stores.

So is the pay row justified?
From a business stand point, pay cuts give M&S some leeway to turnaround without having to fire people, especially the ones who have spent years with the company. So it should be a sentiment that employees appreciate, right? But this is not going down well with the workers especially ones who have been with the company for a long time. From the stand point of the employees reduced pay would mean a shortfall in meeting monthly expenses. This in turn could drive most of the workers to borrow money either through payday lenders or other expensive sources. So it is a double whammy for them – reduced income and increased debt.

Can this gap be filled?
Credit Unions in their partnership with FairQuid can help bridge some of this gap. Since in the FairQuid model the length of service with the company and payroll deductions are key factors to reduce the associated risk for the credit unions. So in effect the employees can use their length of service with the company and negotiate better terms on their borrowings. The money saved through this can help bridge the gap that is left in the income without it costing anything direct to the company.

In all it will be a win-win-win situation for all the 3 parties:
1. Company: It will have a chance to do a recovery and save jobs
2. Employees: Instead of using just their credit score with expensive lenders, they can get to use their length of employment for fair term loans
3. Credit Unions: Success in their mission of providing alternative ethical credit in the UK economy