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3 October 2018updated 02 Sep 2021 5:45pm

Amazon’s wage increase is as much about worker power as public perception

And it will make it harder for those mounting a defence of modern capitalism.

By Frank Bruce

“We can’t lose our faith in competition and choice and markets but we should restate the truth that there is simply no other system that is so miraculously successful in satisfying human wants and needs.”

The comments from Boris Johnson to the Conservative Party Conference this week came as across the pond Amazon chief Jeff Bezos announced a pay rise for workers in Britain and the US. Significantly, the $15 and £9.50 (£10.50 in London) rates will apply not just to in-house staff, but to the company’s army of agency workers. It will be a welcome boost in a climate of rising living costs and pay stagnation.

Amid an increasingly polarised political scene and ahead of a wave of strikes at fast food outlets in the UK, the Tories gathering in Birmingham may be heartened by Amazon’s announcement. Is this not a prime example of how big business can be compassionate? Does it not fly in the face of the divisive rhetoric spread by Jeremy Corbyn’s hard-left hate mobs?

Unfortunately, for the Tories, the answer is no. On the contrary, this pay rise spells more trouble for anyone mounting a defence of modern capitalism.

Johnson’s talk of “competition and choice and markets” will be lost on the first-time voters the party is so desperate to win over. Their experience of modern capitalism is instead corporate monopolies, which have become synonymous with the services they provide. “Netflix” could soon be more common parlance than “TV”, “Uber” is rapidly becoming a verb, and BBC current affairs programmes do not invite viewers on to “social media” – but on to Twitter, a multi-billion company listed on the New York Stock Exchange.

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Shopping too has become an unaccountable racket – Amazon accounts for 33.5 per cent of online spend in Britain, and 49 per cent in the US. The retail giant has faced a barrage of criticism over working conditions in its warehouses, but its sheer market dominance and attractive low prices will shield it from taking a hit in profits. Amazon has long been slated over its tax affairs but historically has argued that it reinvests most of the money it makes. Yet in July it posted a record profit of $2.5 billion.

It is unlikely, therefore, that Bezos has acted solely to prevent reputational damage. It looks more likely that he is seeking to head off a mutiny. Earlier this year Amazon workers went on strike in Poland, Spain and Germany. The GMB trade union, which has already caused trouble for the clothing retailer Asos, has its sights on Amazon’s warehouses in Britain.

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Journalist James Bloodworth has revealed horror stories of workers peeing in bottles to avoid being penalised for loo breaks. “Everything you did during a shift was carefully monitored and categorised, from how long you took to go to the toilet to how many items you picked off the shelves each hour,” he wrote.

It’s easy to dismiss the subsequent furore as hand-wringing by consumerist millennials who would never give up their one-click orders. But viral stories in mainstream and social media – such as the powerful videos tweeted out by Bernie Sanders – will show atomised workers they are not alone. The GMB says its reps have been denied access to Amazon sites. So any bid to unionise will need a level of workforce consciousness high enough to overcome the type of fear tactics routinely deployed by big business.

And it looks like this approach can help. After the first “McStrike” last year, a video produced by Momentum was viewed by an estimated quarter of Britain’s McDonalds workers. The dispute, while still small, has subsequently expanded beyond the original two restaurants affected.

Bezos will be hoping Amazon workers repay his generosity by backing off. Corbyn asserted that “Amazon didn’t gift this, workers organised for it”, but other politicians appear to have swalloed the company’s line. “Well done @JeffBezos,” Scottish Labour’s “fair work” spokeswoman Jackie Baillie tweeted. “Now pay your taxes!”

The fight for decent pay and shop floor dignity must be more than a game of requests and congratulations. Thankfully, Amazon’s move may have another result. Huge corporations justify low pay and appalling conditions on the basis it makes them viable as low-cost retailers. By making such a swift change in response to the threat of industrial strife, Amazon has proved this to be nonsense. The cost on the balance sheet, after all, will be a tiny fraction of the company’s turnover.

This could prove a wake-up call way beyond one company. The apparent ease of the decision could also make Amazon customers – much of Britain and the world – a little more sceptical of the received wisdom about the economics of cut-price retail. If the corporate monopolies can be pushed back, what’s to stand between anyone and their boss? It’s not just Bezos who should be worried.