Heathrow accused of not ensuring all cleaners are paid living wage – while paying huge dividends
Cleaners at Heathrow say that low pay is damaging their families’ lives. They have have complained to the airport’s CEO John Holland-Kaye that they are not getting the London living wage, which was agreed as a condition by the Airports Commission, as part of plans for a 3rd runway. Heathrow had agreed to pay £9.40 per hour, (about £19,500 per year). But the airport workers say this is paid only to directly employed staff and not those working through agencies. They say low wages and long hours deny them “dignity” and the chance to spend time with their children. (John Holland-Kaye himself earned £2.06m in 2015, more than doubling his basic salary of £885,000. He stands to get a huge bonus if he can get consent for a 3rd runway). While directly employed staff are paid £9.40 per hour, those who are employed through contractors might only get £7.20. In October 2015 the FT reported that by the end of 2018, Heathrow aims to have about a third of its employees on salary packages that are about 30% lower than existing terms and conditions. It will also introduce an annual cap of 2% on future increases to pensionable pay for active members, resulting in a one-off reduction of £236m in the scheme’s liabilities. In January 2016 the Sunday Times reported that Heathrow had paid its owners dividends of £2.1 billion since 2012 – but just £24 million in Corporation Tax.
Heathrow accused by cleaners over living wage deal
By Sean Coughlan (BBC News)
Cleaners at Heathrow say that low pay is damaging their families’ lives. They have complained to the airport’s boss they are not getting a living wage for London, agreed as part of plans for a third runway.
The airport, which is waiting for an imminent decision on expansion, agreed to pay £9.40 an hour.
But the airport workers say this is paid only to directly employed staff and not those working through agencies.
They say low wages and long hours deny them “dignity” and the chance to spend time with their children.
Extra runway conditions
The Airports Commission’s official report into airport expansion set a number of conditions for Heathrow if it was given the go-ahead for another runway.
These included environmental and noise limits – but also said that Heathrow should adopt the London living wage.
But cleaners and other airport workers at Heathrow have written to chief executive John Holland-Kaye saying that in practice this has not been extended to all staff.
“We are the people that clean and work in your airport day in, day out. We quietly get on with our work to make sure passengers have a safe and comfortable journey,” says the letter, signed by “Heathrow workers”.
They say that directly employed staff are paid £9.40 per hour, but those who are employed through contractors might only receive £7.20.
This living wage refers to a voluntary rate of £8.25 an hour and £9.40 in London. The government’s mandatory National Living Wage is £7.20 for workers over 25.
“We believe that not paying your cleaners and others the London living wage will be going against the Airports Commission’s conditions,” says the letter, which is supported by the Citizens UK community group.
“Our wages of £7.20 an hour are not enough in order to make ends meet in London. Rent is becoming increasingly expensive, transport costs too, and many of us have families to look after.
“This means that some of us have to work several jobs in order to be able to feed our families. This puts a lot of pressure on our family life as it means we work very long days and have little time to spend with our children.”
They argue that if the principle of the living wage is accepted, it is only fair that it should be paid to “all workers on its premises”.
“Paying people a real living wage that is linked to the cost of living makes the difference between always struggling to make ends meet versus having enough to get by,” said a spokeswoman for Citizens UK.
In response, a spokesman for Heathrow said: “Heathrow is one of the few companies in London that pays all of its 6,000 directly employed colleagues the London living wage or more.
“We recognise the importance of the London living wage and we are looking at how we can roll it out to our supply chain in the future.”
The Guardian reported, on 15..5.2016 that:
CEO John Holland-Kaye earned £2.06m last year, more than doubling his basic salary of £885,000. However, he could add even more to that should a 3rd runway be approved. The annual report states that while a bonus scheme linked to expansion was launched in 2015, “as the performance in respect of this scheme is so uncertain at this stage, no value in relation to these awards is included” in his 2015 earnings package. The Guardian says John Holland-Kaye is believed to be the architect of the new bonus scheme. The airport cut its wider wage bill by cutting 300 jobs last year (6,714 compared to 7,047 in 2014) but directors’ pay rose.
Directors’ remuneration rose by £366,000 in 2015, to £3,555,000 from £3,189,000 in 2014.
The Financial Times reported on 28.10.2015 that
…..[part of a longer article} ….
[John Holland-Kaye’s] ….”comments came as Heathrow announced a 4.1% rise in turnover to £2.07bn for the nine months to September 30. The number of travellers passing through its terminals rose 2.3% to a record 56.9m on the back of a good summer.
Heathrow said it continued to make progress in reducing its overheads **. It has agreed a plan with the UK’s aviation regulator to remove £600m of costs during the five years between 2014 and 2018. It has already secured £400m of cost efficiencies.
Mr Holland-Kaye said the renegotiation of its defined benefit pension plan, which came into effect from October 1, would further improve costs. The changes include the introduction of an annual cap of 2 per cent on future increases to pensionable pay for active members, resulting in a one-off reduction of £236m in the scheme’s liabilities.
It is also looking to make more savings on employee costs. By the end of 2018, Heathrow aims to have about a third of its employees on salary packages that are about 30 per cent lower than existing terms and conditions.
Full FT article at:
** Like changing light bulbs to LEDs to save £600 million per year.
Heathrow annual accounts for 2015 show dividends paid
Sunday Times reports how Heathrow has paid its owners dividends of £2.1 billion since 2012 – but just £24 million in Corporation Tax
The Sunday Times reports that Heathrow has paid its owners back £2.1 billion in dividends, starting in 2012. But it has only paid a total of £24 million in corporation tax since 2006, with that payment being last year. Heathrow’s owners are rewarded whenever the value of the airport increases. If new airport infrastructure is built, the passengers pay for it through the £20 cost on their ticket (and other spending), and the owners benefit.. The CAA calculates how much is spent on investment, and allows Heathrow’s investors to earn a return on the total. The more Heathrow spends, the more its backers can earn. If Heathrow was to spend £17.6 billion on its expansion, the value of the airport would be considered to have increased that much. Due to the huge debts Heathrow has (£12.5 billion out of the £16 billion Ferrovial paid in 2006) the airport’s banks prevented dividends to owners, until 2012. They got £240 million in 2012, which has risen to £2.1 billion. Some of the proceeds of the sale of Gatwick, Edinburgh etc has been used for dividends. The Sunday Times says: …”with a debt-to-assets ratio of about 85% is one of the most heavily indebted airports in the world.” Heathrow will have to recoup the money by high passenger charges, years before the runway is built and open, as otherwise Heathrow’s massive investors are not prepared to take the financial risk. Heathrow is no longer a company quoted on the stock exchange, but that could happen in future.
Heathrow cutting 200 jobs (20% of total core staff) due to CAA restriction on landing charge rises
Heathrow Airport is planning to cut 20% of its core workforce despite turning its first profit since 2006 and said it is undergoing a “major” restructuring. Its full-year results statement showed it made a £426m pre-tax profit last year, up from a £33m loss previously, helped by the £1.5bn sale of Stansted in February 2013. Heathrow says it is making the staff cuts due to the CAA not allowing it to increase landing charges, though Heathrow can appeal till March 27th. These will be reduced in real terms by 1.5% below the rate of inflation every year until 2019. Colin Matthews said the cuts are likely to affect around 200 staff but no front-line roles, such as security, will be affected. Heathrow employs 7,000 people in total but 1,000 of those roles are part of its “central” head office structure, which is where the job losses are, partly due to having sold off its other airports. In 2013 Heathrow’s revenue rose 11.3% to £2.5bn, and it had 72.3 million passengers, though that is far below earlier forecasts for 2013 traffic. Excluding money from selling Stansted, Heathrow’s EBITDA rose 23.1% in 2013 to £1.4bn. The number employed by Heathrow Airport Ltd in 2012 was 5,278 (compared to 5,265 in 2011 and 5,148 in 2010).