Amazon is offering $4,000 bonuses to lure U.K. workers

Amazon warehouse in Leeds, England.

Nathan Stirk | Getty Images

LONDON – A labor shortage is forcing British companies to raise wages to compete for workers, with Amazon offering bonuses of up to £3,000 ($4,140) in the run-up to the holiday period.

The e-commerce giant is currently advertising a number of jobs across the UK that come with huge cash rewards. One role, for a temporary warehouse worker in the English city of Exeter, is to offer an additional bonus of £3,000, while a London-based position with the company offers a signature bonus of £2,000. Many other roles in Amazon UK warehouses offer welcome bonuses of £1,500.

Base hourly rates are £11.10 an hour in London, while overtime pay can be up to £22.20. The average wage for warehouse workers in the UK is £10.16 an hour, according to job site Indeed.

Amazon’s strong recruitment drive reflects the employment problem that spans industries across the UK

An estimated 100,000 truck driver shortage in Britain has disrupted deliveries and emptied store shelves, and a backlog of work at ports and dry fuel stations. Meanwhile, industries including agriculture, warehousing, food processing and hospitality have warned of an acute labor shortage.

Graham Sheen, secretary of the UK Warehouse Keepers Association, told CNBC on Tuesday that there is a shortage of warehouse workers, especially after Brexit.

He explained: “If you’re coming from another country, you have to earn at least £26,000 to get a work visa – people who go to warehouses are not going to make that kind of money.” “So they won’t go to storage.”

Shen noted that other warehousing companies will likely have to rethink what they offer employees in light of the bonuses and pay rates offered on Amazon.

“For other companies to try to get to that level, this is a huge investment for them, but it’s just something they have to invest in, whether it’s in bonuses or increasing wage rates, which ultimately raises costs to get the best people.”

The latest figures from the UK’s Office for National Statistics showed that job vacancies reached a record 1.1 million between July and September.

Many employers, such as Amazon, offer financial incentives to attract employees. A survey of more than 400 UK human resources managers published by Indeed Flex on Wednesday showed that nearly half of companies have raised wages faster than usual in an attempt to tackle a labor shortage.

Albesh Baleja, chief economist for the Confederation of British Industry which represents 190,000 companies, told CNBC by email Tuesday that labor shortages remain a challenge in many parts of the British economy.

Employers are using everything they can to mitigate this problem, through targeted wage increases, boosting investment in training, expanding their talent pools, and ramping up investment in digitalization and automation.”

Small businesses struggle

Many small businesses are simply unable to shell out the money to solve the problem and struggle to compete with the likes of Amazon when it comes to hiring.

Mike Sherry, head of the Small Business Federation UK, said: “The number of small businesses citing access to the right skilled staff as an impediment to growth is now 38% – the highest level in five years – with no sign of abating at any time. Close,” to CNBC via email on Tuesday.

Julia Kermode, founder of IWork – an organization representing temporary workers, the self-employed and the temporary economy – told CNBC that the labor shortage was so bad that the UK’s “army of temporary workers” was unable to meet demand.

Several companies across the UK told CNBC they were having trouble finding employees but were unable to raise wages after the pandemic.

Jo Bevilacqua, who owns a beauty salon, said hiring qualified and experienced staff has become impossible.

“Many have left the industry during Covid, unable to tolerate the ongoing shutdown, or not wanting to deal with the pressure once the industry reopens,” she told CNBC in an email. “It worries me where the industry will go if more and more people leave in search of other opportunities – although we invest a lot of time and money in employee training and incentives, we can’t compete with the likes of Amazon with their £3,000 welcome bonus.”

Adam Bamford, CEO of gift-blocking company College Boxes, told CNBC he’s been seeing hiring pressures “across the board,” particularly in warehouse and packing jobs.

“As a small business, we can’t afford to sign bonuses for short-term contracts, and I understand why if you’re looking for a job you get paid,” he said. “The rewards are often a month or two’s wages, which covers the period we’re looking to hire – so we’re basically paying double the time all the time.”

Flexibility and Ethics

Incentives other than wages also come into play.

According to Flex Indeed data, half of UK companies were focusing on non-financial perks such as flexible working hours to attract potential recruits.

Chris Sanderson, CEO of hospitality recruitment app Limber, told CNBC via email Tuesday that the pandemic has caused a disconnect between employers and employees, leaving many businesses far behind.

“In the hospitality sector, for example, companies across the country are struggling to find employment because they have not adapted quickly enough to the necessary requirements of many young people after their experiences with the pandemic, which are flexibility, diversity and control,” he said.

Kermode added: “It’s incredibly competitive, and many small businesses simply don’t have a lot of money to get rid of the problem. But money isn’t everything and it’s all over – people want to work with companies that they agree with on their ethics and values, companies that have Positive impact on the wider world.”

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