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9 December 2012
COFFEE HOUSE CULTURE
Tax-avoiding multinational companies are not the flavour of the month in Britain. In fact three of them – Amazon, Google and Starbucks – garnered a mauling from the Public Accounts Committee of the House of Commons when they were hauled before it on 12 November 2012 to explain themselves.
Today we look a bit more in detail at Starbucks. According to Wikipedia, Starbucks is the largest coffee house company in the world with around 20 500 stores in 61 countries. It was founded in 1971 and is based at Seattle in the US State of Washington.
You might have expected exemplary behaviour on all fronts – prompt payment of corporate tax, for instance, and model employment conditions – from a company with such a high international profile.
Well, judge for yourselves. In the UK Starbucks is reported to have around 750 outlets and a staff of around 7000. Yet in the past 15 years it has paid very little tax since, as it told the Public Accounts Committee, it rarely makes a profit.
This puzzled the committee. How on earth could the company afford to keep trading while rarely turning in a profit? Such a state of affairs seemed to run somewhat counter to the normal business model. One wag suggested that Starbucks is actually a charity!
Taken aback by its savaging at the hands of the committee, Starbucks is reported subsequently to have agreed to consider upping its UK tax payments.
One lesson we can learn from this is that even mega-sized multinational corporations, highly concerned with projecting a wholesome brand image, are not impervious to public pressure.
However, today we want to draw attention to the company’s treatment of its employees.
On 4 December 2012 the London Guardian published the following snippet:
New contractual terms being circulated to staff across 750 UK Starbucks stores include the removal of paid lunch breaks, an end to cash incentives for becoming manager or partner of the year and the removal of a bonus scheme for women returning after they have had a baby.
A Starbucks spokeswoman said the contract changes followed several months of consultation with a group of employees and that all employees ‘were given the opportunity to feed back’.
The news drew a brickbat the next day from Guardian columnist Seumas Milne who was highly critical of the fact that “an anti-union firm such as Starbucks can announce it’s cutting staff benefits on the day it’s in the public dock for tax dodging”.
The same day, 5 December 2012, the following letter appeared in the paper from reader Geoff Fieldsend of Sheffield:
“So the business strategy of Starbucks becomes clear (Starbucks to slash range of workers’ benefits, [Guardian] 4 December). Impoverish and exploit staff to the full, operate temporarily on a no-profit basis and squirrel all profits safely away from the UK tax authorities. Over time, this should have the effect of putting out of business the small tax-paying cafes which contribute to the community, with the result that the only coffee “product” available will be those huge bowls of frothy, tasteless milk that Starbucks seems to specialise in. So much for the ‘free market’.”
It is one thing for the House of Commons Public Accounts Committee to savage international corporate tax avoiders. It is another for the Government to take action to bring them to book. Wanting, like any government, to attract international investment, which brings both wonga and jobs into the chosen country, the UK Government is wary of wielding a big stick against international household names for fear that a heavy-handed approach might deter other potential investors. So Antigone1984 remains sceptical of whether much will be done in practice to remedy the tax scandal.
What is certain is that the UK Government will do nothing whatever to pressurise Starbucks into improving the lot of its workforce. In fact, what Starbucks is doing by degrading staff working conditions is precisely what the current anti-worker UK Tory Government wants it to do. The policy is called “flexibility in the workplace”. The idea is to reduce workers’ pay and conditions till they are just enough to keep body and soul together. Slave labour is what we need, you see, to “compete in the global market place”. And it’s not just in Britain either. Governments are at it all over the world. And not least in the holier-than-thou world of the European Union. The Tarfuffes of Brussels, Frankfurt and Berlin have jettisoned the so-called Rhine model of capitalism – a market economy tempered by arguably reasonable social and working conditions – for the IMF model of capitalism red-in-tooth-and-claw, ie the law of the jungle. Look at how they have turned Greece into a Third World country. Spain is next in line. And after that who knows which will be the next state to suffer salvation by fire? Brussels’ order of the day is now “sauve qui peut!” So much for the wonders of the eurozone, which was meant to usher us into a land flowing with milk and honey when it was launched around the turn of the century.
For our own part, Antigone1984 never patronises a multinational corporation where a local enterprise can provide comparable goods and services. Even where this is not the case, we frequently go without rather than bestow our custom on giant international predators which are sucking the life-blood out of national economies.
Readers who wish to consult our short report on the Public Accounts Committee meeting with Starbucks, Amazon and Google should click on “Coining it”.
You might perhaps care to view some of our earlier posts. For instance:
1. Why? or How? That is the question (3 Jan 2012)
2. Partitocracy v. Democracy (20 July 2012)
3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)
4. Capitalism in practice (4 July 2012)
5.Ladder (21 June 2012)
6. A tale of two cities (1) (6 June 2012)
7. A tale of two cities (2) (7 June 2012)
8. Where’s the beef? Ontology and tinned meat (31 Jan 2012)
Every so often we shall change this sample of previously published posts.