Brewdog Faces Backlash as it Ditches Real Living Wage for Minimum Wage

Craft beer powerhouse Brewdog has ignited controversy by announcing its departure from the real living wage for new hires.

The company will now adhere to the UK government's national minimum wage of £11.44 an hour, falling short of the £12 cost-of-living-based rate. This decision, framed as "necessary" for the brand's return to profitability following a £24 million operating loss in the previous year, has drawn criticism from former employees who accuse the company of forsaking its principles.

Brewdog, founded by James Watt and Martin Dickie in Aberdeenshire, had voluntarily paid the real living wage since 2015. However, a recent letter to employees, obtained by BBC Scotland News, outlined the company's decision to transition to the government-mandated minimum wage from April. This shift is portrayed as a crucial step toward financial stability, especially in the wake of a challenging fiscal period marked by a £24 million operating loss.

Former staff members have sharply criticized Brewdog, accusing the company of abandoning its principles. A letter to employees emphasized the necessity of making "hard decisions" to sustain financial stability, despite a reportedly successful festive season. The decision to abandon the real living wage, which is independently calculated based on UK living standards, is viewed as particularly contentious given the ongoing cost-of-living crisis.

Bryan Simpson, hospitality organizer of Unite, expressed strong opposition to Brewdog's decision, describing it as "outrageous" to withdraw the real living wage during a severe cost-of-living crisis. Unite is actively collaborating with Brewdog members across the country to challenge this decision collectively and advocate for the rights of workers who have contributed to the company's success.

The real living wage stands apart from the government's national living wage, with the former being based on calculations that consider the actual cost of living in the UK. From April, the real living wage is set to increase to £12 an hour outside London and £13.15 for workers in the English capital, reflecting inflationary adjustments.

While Brewdog staff aged 23 and above will experience a modest pay increase, moving from £10.90 to £11.44, those working in London will witness no change from their existing rate of £11.95. Blog posts on the brewer's website highlighting its status as a living wage employer have been removed, further fueling criticism and accusations of inconsistency.

Punks with Purpose, a campaign group representing ex-Brewdog workers, emphasized the significance of the real living wage to Brewdog's public identity over the years. The group criticized the decision as a "real-terms pay cut for hard-working frontline staff" and challenged Brewdog's previous assertions about the importance of fair pay for its employees.

Despite Brewdog's revenue reaching £321.2 million in 2022-23, the company reported a £24 million operating loss. The financial challenges were attributed to increased production costs for its popular product, Punk IPA, and rising energy bills at its Ellon plant. Co-founder James Watt previously issued an apology to staff following a BBC Disclosure documentary in 2022 that featured claims of inappropriate behavior within the company.

Brewdog emphasized that the changes, despite their impact, are geared toward ensuring the company's long-term financial viability. The spokesperson pointed out that, as a result of the adjustments, staff outside London will receive a 4.95% increase in base pay, and London-based employees will be paid 4.5% above the National Living Wage. The company maintains that its benefits package surpasses industry averages, reflecting its ongoing commitment to the well-being of its workforce.

The move by Brewdog to abandon the real living wage has not only sparked outrage among former employees and union representatives but also raised concerns about the potential impact on the wider discussion surrounding fair wages in the hospitality sector. As Brewdog navigates this controversy, it faces the challenge of balancing financial considerations with its commitment to the principles that have defined its brand image. The company's next steps will likely be scrutinized closely, both within and outside the industry, as it grapples with the fallout from this decision.