Boots owner faces shareholder call to ensure all employees paid real living wage

The owner of Boots is facing calls from shareholder activists to ensure all their employees are paid a real living wage.

The Shareholder Commons, who campaign for responsible investment, filed a resolution at US firm Walgreens Boots Alliance ahead of the company’s annual general meeting on 25 January.

Shareholders are being urged to vote for the proposal, which requests the board and management establish company wage policies designed to provide workers – both permanent employees and contractors – with the minimum earnings necessary to meet a family’s basic needs.

The text of the resolution said the measure is also aimed at "protecting its diversified shareholders’ portfolios from economic harm that arises from low wages and inequality".

The activists claim that starting wages for Walgreens’ lowest paid workers in the US fall well below a living wage, citing the Massachusetts Institute of Technology’s (MIT) living wage calculator.

They argue that while "poverty wages" might increase profits in the short-term for individual companies, they damage the returns of investors’ diversified portfolios in the long run.

The Shareholder Commons proposal, which is supported by UK charity ShareAction, also relates to Boots as a company owned by Walgreens.

It comes amid speculation that the American parent company might be looking to sell the British health and beauty retailer to fund its expansion into new areas domestically.

ShareAction is calling for investors to use their voting rights at Walgreens to push for a real living wage for all its 51,000 UK employees.

Boots currently pays customer service employees an hourly rate of £10.42 – the legal living wage nationally – with the rate increasing to £10.90 after six months in the role.

The £10.90 rate aligns with the 2023/24 national rate from the Living Wage Foundation, which independently calculates "real living wages" based on the cost of living in the UK.

In inner London, a Boots customer service employee is paid a higher rate of £10.95, which increases to £11.95 after six months in line with the Living Wage Foundation’s London rate.

However, ShareAction said the company should pay all employees the foundation’s real living wage from their first day and that the London living wage should apply to all stores in Greater London as well.

Daniel Howard, Head of Good Work at ShareAction, said: "It’s a no-brainer for investors to vote in support of this resolution.

"This resolution will ensure Boots shop staff are paid a decent wage from day one to live on.

"Tackling increasing growth in inequality isn’t only in the interests of poorly paid workers, but investors themselves, as it positively impacts our economy as a whole."

The charity added that given the current economic uncertainty, it advocates for companies to ensure workers have future security by committing to pay the foundation’s living wage in the long-term.

The Government’s new legal living wage will increase to £11.44 an hour in April.

Meanwhile, the Living Wage Foundation has given employers until May to adjust wages to meet its new rates of £12 nationally and £13.15 in London for 2024/25.

Boots said it pays the vast majority of its team members above the living wage and that the firm is currently reviewing all its pay rates for April as part of its annual pay review, with plans to announce them soon.

A spokesperson said: "Boots UK pays its people fairly and competitively and in line with or above the national living wage.

“"In addition, we offer a generous benefits package which includes pension contributions, an annual discretionary bonus or Christmas gift payment and team member discounts."

Walgreens declined to comment but has recommended shareholders vote against the resolution in its proxy statement ahead of the AGM.

It said: "The board does not believe that establishment of the requested wage policies as set forth in the stockholder proposal is necessary or the optimal use of company resources.

"Additionally, establishing and complying with such a policy detracts from the holistic approach that we use to offer competitive wages and benefits for our team members.

"Our board strongly believes we currently take appropriate action to consider the issues raised in the stockholder proposal."

In the text of the resolution, the activists said this assertion is "manifestly false" and that the company fails to acknowledge or comprehend the differences between living wages and competitive wages.

They added that while Walgreens has made progress in improving its team members’ pay and compensation to the extent that it maximises its own success, the proposal "deals strictly with the economic interests of its shareholders and corporate activities that undermine those interests".