18 August 2014 – Supermarket workers and productivity

Larry Elliott wrote in the UK’s Guardian yesterday about the apparent trade-off between supermarkets introducing self-service checkouts and employing ever-growing numbers of staff to fill trolleys for on-line shoppers. He comments on how supermarkets now need to employ more people so that customers ‘can spend 15 minutes on the internet rather than an hour or so in the store’ and that supermarkets are taking a ‘big productivity hit’ to keep their online customers happy as the real cost of providing the on-line service is far higher than the nominal £1 delivery charge.

At the core of Larry Elliott’s article is his observation that supermarkets are keeping these losses to a minimum by employing those who wish/need to top up their pensions, young people struggling to find a job, and the long-term unemployed. This, he argues, chimes with the interests of the coalition government – as supermarkets want cheap labour, so the government wants to get people off welfare – and the result is that productivity falls as more people are employed to produce the same level of output, whilst standards of living continue to decline.

This got me thinking about this growing group of workers who, apart from coping with low wages, are apparently depressing the level of average earnings growth across the UK economy (as Larry Elliott puts it). It raises questions about both the economic and social impacts of this rapid escalation of on-line shopping and reinforces Joanna Blythman’s suggestion that supermarkets are in ‘structural decline’ (see this blog 20 March 2014). It also highlights the huge increase in the number of 65s who are working; a rise of more than a million since the coalition came to power. How does this impact on their food shopping habits? Also, is the supermarket becoming the preserve of the elderly, the young and those struggling to make ends meet as everyone else shops on-line?

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