Comment: Underpaid ‘heroes’

As grocery companies pay executives millions in bonuses their lowest-paid staff are at high risk

Almost everyone agrees that grocery store workers should earn better wages, especially during a pandemic.

In Canada, their hourly rate hovers around $15 an hour. New hires get about $13 an hour, while the highest paid earn almost $50,000 annually, or about $25 an hour. In a high-volume, low-margin world, salaries are what they are, but it’s hard to accept such salaries when executives are pocketing near-record bonuses.

Following Metro’s announcement this week, the top-paid executives at the Central Canada chain shared $3.48 million in annual bonuses for the fiscal year ending last September, including $1.43 million for CEO Eric La Flèche, an increase of three to five per cent compared to 2019. La Flèche is considered by many as one of the best CEOs in the business and his leadership has been recognized numerous times by awards over the years, even a few this year.

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Even if these bonuses are probably merited, they come in the wake of multiple employee compensation program cancellations. During the first wave of the pandemic in the spring, several retailers, including Metro, offered increases to in-store employees and those in distribution centres. Its programs ended abruptly in June, along with the programs of other grocers like Loblaw and Sobeys. With absenteeism a major issue in the spring, temporary financial incentives have helped retailers retain staff.

As the average Canadian grocery store has about 80 full-time employees, and payroll accounts for 30 per cent of operating costs, these programs caused stores to operate at a loss. The math did not and could not work for grocers and that is essentially the crux of the matter. “Hero pay” programs, as some called them, were never going to end well.

In addition to the bumped-up dividends awarded to shareholders this year, the bonuses paid to executives create unease. The $3.6 million given to Metro’s top five executives would have enabled the Quebec-based grocer to increase the salaries of 800 full-time employees by 10 per cent for one year. Incongruity across the board. These employees are predominantly women, students, or older people, and many of them must hold more than one job.

For the second wave though, some grocers are providing bonuses, but with a different twist. This different approach better suits their financial reality by now offering temporary “lockdown bonuses.” The wording suggests these programs are meant to serve a provisional purpose while recognizing the challenges of the times. At Empire/Sobeys/IGA, since November, employees will earn an additional $10 to $100 per week, depending on the hours worked. The program is in force in Manitoba, the Peel Region in Ontario, and Toronto. Other regions like Quebec have now joined the program.

For its part, Metro launched a “thank-you gift” program to the employees of stores and distribution centres in the form of a one-time gift card redeemable in its corporate stores. Full-time employees received a $300 card, while part-time workers received $150 or less, depending on the number of hours worked per week. No word from Loblaw yet.

These gifts or bonuses given to employees are better than nothing, but with the pandemic and the hardship many Canadians face these days, the bonuses given to top executives at Metro are ill timed. Even Metro vendors and food processors, who are being charged extra fees for doing business with Metro and other grocers, will question the morality of these bonuses. Metro is not in pharmaceuticals or an automotive company. Metro plays a part in making our food, a necessity of life, affordable. The stakes are different.

COVID-19 has made us realize that many people whose jobs are too important to be interrupted are the ones earning the least money. These employees fully deserve these bonuses. However, now is not the time to hand out nearly $4 million in bonuses to five executives, in an industry where retail prices align with the food security of many families. In other sectors, these bonuses are linked to performance, but in the food industry it is an ethical question.

Offering better wages calls for a different business model with better use of analytics, increased presence of robotization and automating operations. Such an approach will require specialized knowledge and talent. How the industry is slowly becoming more digital is also getting grocers to think differently about their workforce. This will mean fewer jobs, maybe, but better-paying jobs. The digital shift that the sector is currently experiencing will also help. This is the future and wages could become less of an issue moving forward.

But for now, excessive bonuses should at least wait. Not a good time.

About the author

Contributor

Sylvain Charlebois is senior director, Agri-Food Analytics Lab, and professor in food distribution policy, Dalhousie University.

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