Tax row coffee chain pays ‘poverty wages’ despite making £222 million profit in three months
Gethin Chamberlain, in Mumbai, for The Sunday Mirror, 10 November 2012
TAX row coffee chain Starbucks is paying workers just 25p an hour at its newly-opened stores in India.
The pittance falls far below the country’s official living wage and means some staff earn less in a day than the price of the cheapest cup of Starbucks coffee in the UK.
Details of the wages emerged as the world’s biggest coffee chain, worth £25billion, attempts to gain a foothold in the sub-continent by opening its first three outlets in Mumbai.
Just weeks ago it was revealed that the company, which prides itself on being “ethical”, paid no tax in Britain for the past three years.
Our findings have outraged campaigners, who accuse Starbucks of “ruthless greed” and paying “poverty wages”.
Under Indian law, restaurant, hotel and cafe owners are only required to pay their staff 17p an hour, or £6 a month.
But the Indian “living wage” – the amount people need to eat, drink and pay the bills – is set at 67p an hour.
When our investigators visited the Mumbai Starbucks they found cleaners were earning just 25p an hour – about £2 a day.
And even the baristas who serve coffee were being paid only 56p an hour, less than £5 for a day’s work.
The 36 staff working in the three stores – called ‘partners’ in Starbucks speak – were nervous about speaking out for fear of losing their jobs.
Nearby coffee shop owners said it was common for companies to pay low wages.
One explained: “These kids are desperate for work to improve their living conditions and so they are just glad to have a job.
“The TV is full of adverts for all the good things in life and if you are at the bottom, the only way is to take what you are given in the hope that you can one day afford all those nice things.
“To be fair to Starbucks, they are not the worst people here, but it would be nice to see them taking the lead and trying to change the culture of how people are paid.”
Starbucks’ international slogan is “Love Coffee. Love People.”
On its website it claims it has dedicated itself to “earning the trust and respect of our customer, partners and neighbours” by “being responsible and doing things that are good for the planet and each other.”
But fair wage campaigners accuse the company of not putting its money where its mouth is.
Murray Worthy, of antipoverty charity War on Want, said: “These wages are an insult… less than half a living wage. All workers should receive a wage that can feed their families, put a decent roof over their heads and pay for essential health care and education.
“Campaigners and trade unions have calculated a living wage that would cover these basics would be 12,000 rupees a month (60p an hour).
“Starbucks’ wages do not even come close to this. It is nothing less than ruthless greed that drives Starbucks to pay these poverty wages.
“After the recent criticism over not paying tax, you’d have hoped Starbucks might be willing to take the lead and help drive forward fairer wages. Companies should pay a living wage that allows people to live with dignity, regardless of where they are in the world.”
Anannya Bhattrcharjee, of Asian Floor Wage which calculates the living wage for India, said: “Starbucks’ lack of commitment to even a minimum living wage, which would not even create a noticeable dent in its profit margins, is alarming.
“This type of business practice is singularly responsible for the extreme rise in inequality we see in the world and in India.”
Last night a spokesman for Starbucks said: “We are dedicated to creating a workplace that values and respects people from diverse backgrounds, and enables our partners (employees) to do their best work.
“We call them our partners because they directly contribute to our success by helping us build the brand one cup at a time, one person a time.
“While we cannot divulge details on remuneration figures, we lay strong emphasis on partner development through education, training and engagement and provide them with an environment that supports and inspires.
“In India they receive the highest quality coffee house experience at our stores.”