Challenging Amazon Report

Criticisms of Amazon

As trade unions, our focus is improving the rights of those who work at Amazon. But while tackling every aspect of Amazon’s business model is beyond the scope of this report, it is important to set out the many criticisms levelled at the company to understand the complexities of their activities and the challenge this poses in pushing for more accountability from the global giant.

Working for Amazon

Much of the controversy around Amazon’s employment practices focus on their fulfilment centres and distribution networks. The company drive to ‘put the customer first’ has pushed employees to extremes and many have spoken out about a range of issues, some of which are presented below.

Fulfilment centres and offices

Reports of long, gruelling shifts with unreasonable productivity targets and unfair shift patterns are common in Amazon fulfilment centres. In the UK, pickers are expected to pick and pack around 300 items per hour, employees tend to only either do day or night shifts and working weeks average around 55 hours/ 10-hour days, especially over the peak Christmas period[1]  Staff were reported to have slept in tents near the Dunfermline site in Scotland to save money and so they are not late for work, which would risk them being penalised or fired[1]. 

Workers’ productivity performance is also monitored, and they are harassed and disciplined or even sacked if they dip below targets. One undercover reporter said that while working in an Amazon fulfilment centre in Essex over the black Friday period, scores of staff who dipped below targets were sacked. It has been reported that the high level of monitoring creates a culture of fear, many workers do not take their legally entitled breaks because of the impact it has on productivity and the subsequent risk to hours and ultimately employment, particularly for the many temporary and agency workers it hires. The scale of the warehouses is so vast that many employees do not have time to go to the break room or for bathroom breaks – one report stated that employees were urinating into bottles[1].

The gruelling working conditions have led to serious accidents at work and staff collapsing from exhaustion. In just over three years, ambulances were called out 600 times to 14 Amazon warehouses in Britain[1]. In more than half of those cases patients were taken to hospital. Over the three years, the highest number of calls (115) came from Amazon’s Rugeley site; in comparison, a similar sized supermarket distribution centre a few miles away had only 8 calls over the same period[2]. GMB surveyed its members who worked for Amazon, revealing that 87 per cent said they were in constant or occasional pain due to their workloads[3]. In the US there have been reports of calls to 911 for staff attempting suicide or having suicidal thoughts[4] and people have died while at work[5] .

Other examples of unacceptable working conditions, which were revealed by GMB through Freedom of Information requests, included workers being forced to work in freezing temperatures, and a dangerous near-miss heavy machinery incident caused by a ‘lapse of concentration possibly due to long working hours.’ A number of workers who made health and safety complaints to regulators did so anonymously, because they said they feared being sacked by Amazon.^[1]

GMB have provided us with case studies (see box 1) and testimonies from Amazon workers, highlighting some of the awful experiences and conditions workers are subjected to, including the mistreatment of pregnant women and harassment, verbal and physical abuse of workers from other colleagues.

Some reports from the corporate offices suggest the culture is just as demanding. Workers are encouraged to tear each other apart in meetings, work long and late hours and never disconnect. Staff have been seen ‘weeping’ at their desks and even junior level employees must sign lengthy confidentiality agreements[2] .

Last mile delivery drivers

Conditions for delivery drivers working on what is known as ‘the last mile’, who are usually required to be self-employed or are contracted through third parties, have also found the target driven nature of the business relentless, low paid and dangerous.

A 2016 undercover investigation revealed that drivers were expected to deliver up to 200 parcels per day. Drivers often worked more than 11 hours, breaking legal limits and by the time deductions for things like optional van hire, insurance etc. were accounted for, ended up earning less than the minimum wage at the time of £7.20 per hour[1].

By using self-employment and third party contracting, Amazon have been able to dodge any accountability for accidents, pushing all the risk and consequences onto drivers. This has been in the spotlight in the United States, where drivers delivering parcels for Amazon have been involved in fatal accidents. In one such case, the family of someone who was killed in an accident involving an Amazon delivery driver attempted to sue for wrongful death, they were told by the company’s lawyers: “The damages, if any, were caused, in whole or in part, by third parties not under the direction or control of Amazon.com” [2].

However, it is well documented that Amazon drivers, though not directly employed by them, much like their warehouse colleagues, have their performance tracked and are under immense pressure to complete the routes they are given within certain time frames[1].

Many third-party contractors have become reliant on Amazon for business, but again Amazon has been known to terminate contracts at short notice, forcing businesses into bankruptcy. However, they are never liable. As one report puts it:

‘That means when things go wrong, as they often do under the intense pressure created by Amazon’s punishing targets — when workers are abused or underpaid, when overstretched delivery companies fall into bankruptcy, or when innocent people are killed or maimed by errant drivers — the system allows Amazon to wash its hands of any responsibility’[2].

Amazon, in response to criticisms of its employment practices, are keen to point out they abide by local labour laws and pay a competitive rate for distribution centre workers (£9.50 an hour in the UK for example). However, hourly rates are dependent on job roles, with pickers likely to earn an average £8.28 an hour[3] - just above minimum wage.

A look through reviews on recruitment websites reinforces what GMB have told us about what they are hearing on the ground from people working for Amazon and the gruelling conditions (see box 2)[4].

Historically Amazon have been known to have supressed unionisation and sack people who attempt to organise, encouraging managers to bust any unionisation attempts they may see[5]. They have even closed call centres in response to unionisation attempts in the US[6].

More recently they have come under fire for advertising an ‘Intelligence Analyst’ role which was specifically geared towards monitoring workers efforts to unionise and feeding back to senior management[7]. The advert was removed after Amazon was asked to comment on the article.

And it seems that this is not just a practice confined to their warehouses with a recent report emerging from the US of an Amazon Web Services employee warning colleagues that Amazon where monitoring employees with protected characteristics and any organising they may be doing. Amazon have denied the claims[8].

There are many reports of poor employment practices at Amazon, from gruelling conditions to surveillance to poor management behaviour and they refuse to recognise or engage with unions unless forced. Amazon argue they would rather have direct dialogue with employees where there are problems, but recent evidence during the Covid-19 pandemic further suggests that they actively discourage organising in any form.

Amazon and the Coronavirus pandemic

When looking at Amazon’s social performance during the Covid-19 pandemic, versus its financial performance, the contrast could not be starker. While their share price rockets and market dominance spreads, the stories emerging from warehouse workers and drivers on the frontline has put a spotlight on the real human cost of Amazon’s business practices.

Reports of a lack of protective equipment or sanitary measures, no ability to social distance, unsafe, and unrealistic productivity targets still being in place have all emerged during the crisis[1]. As the number of Covid-19 cases in Amazon warehouses began to rise - Amazon workers across Europe[2] and America staged strikes and walk outs to try to get the company to act[3] and legal challenges have also been mounted by workers[4].

In France, following legal action from French unions, authorities ordered Amazon to temporarily sell and deliver essential items only to reduce the risk to workers while they investigated its health and safety measures. Amazon responded by closing their six warehouses for several weeks, eventually reopening after negotiating a deal with unions[5].

The German Union Verdi staged strikes at six Amazon sites across Germany after Amazon continued to stall on ongoing wage disputes and a push from the union to get a collective bargaining agreement for good and healthy work. Verdi stated “We are stepping up the pace because Amazon is not showing to this point any insight and is endangering the health of employees in favor of profit"[6].

Similarly, in Spain, CCOO union having had unsuccessful discussions with Amazon and limited improvements in safety measures, contacted the Labour Inspectorate to review Amazon’s response to the Covid-19 crisis. After much effort the action eventually led to over 100 safety measures being implemented in distribution sites across Spain[7]. 

In the UK, GMB Union have exposed multiple examples of a lack of Covid-19 health and safety measures across their sites. A lack of social distancing, washrooms, sanitiser and poor cleaning regimes and no PPE have all been reported to GMB. There has also been video and photographic evidence of cramped conditions for workers when going through security, in corridors and in locker rooms. GMB exposed this publicly and stated their intention to go to the Health and Safety Executive and call for urgent inspections of all Amazon sites across the UK[1]. Within days, Amazon then began to implement several required Covid-19 safety measures.  

Amazon state that they have implemented a range of safety measures and policies to tackle the spread of Covid-19 in their warehouses[2], but with Amazon revealing that nearly 20,000 of their workers across the US have contracted Covid-19[3], the evidence suggests they are doing the bare minimum unless forced[4].

The right to unlimited, unpaid leave was introduced at the start of the crisis, meaning many employees have had to make the choice between getting paid and their health if they needed to self-isolate. Worse still, despite the ongoing health crisis, since the start of May even that policy has been terminated, meaning many workers fear being fired if they miss a shift[5]. In California, where there is an entitlement to sick pay, there have been reports that Amazon told workers the law didn’t cover warehouses[6].

A temporary extra two dollars/pounds/euros ‘hazard pay’ on Amazon warehouse workers hourly rate ended in June despite the continued risk workers are taking and the sales boost Amazon is experiencing during the crisis.

And while Amazon says it likes to directly engage with employees, workers in America who were some of the first to speak up were fired for raising the alarm, prompting senior Vice President Tim Bray to resign stating in an open blog regarding his decision; “The justifications were laughable; it was clear to any reasonable observer that they were turfed for whistleblowing”[7].

Tax and subsidies

Another well-known criticism of Amazon is the low level of tax it appears to pay in its multiple markets. In fact, UK based organisation Fair Tax Stamp ranked Amazon the worst of the big six tech giants for aggressive global tax avoidance[1]. Looking at cash tax paid (as opposed to current tax charge or current tax expense) Amazon between 2010-2019 paid only US $3.4 billion (£2.7 billion) in tax on $960.5billion (£740 billion) of revenue and $26.8billion (£20 billion) of profits - significantly less than any of the other big six.[1] 

Because of a complex business structure with lots of divisions it is hard to know how much tax Amazon is or isn’t paying (particularly outside of the United States) and Amazon does not reveal profits or corporation tax for its entire UK operation, which would include both its retail business and its logistics and warehouse division[3] .

What we do know is that Amazon Services ltd (the logistics arm) paid £14 million in UK corporation tax in 2018, which was a £10 million rise from the previous year of just £4.7 million. However total 2018 revenues for the whole UK operation were £14. 5 billion. Amazon have said they paid a total of £220 million in various taxes including corporation tax, national insurance, business rates and stamp duty and that business rates and employers NI accounted for over £120 million. That would suggest it paid less than £100 million in other direct taxes - experts have suggested they should be paying £100 million in corporation tax alone[4]. Outside of the UK, while there does appear to be some effort to recoup some of the tax lost to Amazon’s aggressive tax minimisation, they still appear to have multiple ways of gaming the system. For example, the EU ordered Amazon to pay 250 million euros (£222m) in back taxes to Luxembourg (where it runs many of its revenue streams through) in 2017[5]. However, between 2018 and 2019 they have received tax credits of nearly half a billion euros which will be deductible from any tax bill[6].

Receiving subsidies and tax deductions is commonplace in the United States, where they have also been known to threaten and pull out of warehouses and investment when demands for higher taxes are made[7] . The most high-profile example being Amazon’s withdrawal of plans to build a second headquarters in the Queens District of New York. The company was set to receive nearly US $3 billion (£2.4 billion) in subsidies in exchange for bringing 25,000 jobs to the area. Campaigners, including unions, objected to the subsidy and raised other concerns – and Amazon pulled the plug[8].

There have also been reports of similar activity in the UK. It is reported that between 2010 and 2015 the Scottish government gave Amazon £7.5 million in grants[9]. The Welsh government awarded Amazon a grant of over £7.7 million to support establishing operations in Neath Port Talbot where there is now a warehouse[10].

At local level, Amazon often benefits from local authority investment in infrastructure and site development, for example in Torbay where the council invested £15 million in a site linked to and eventually confirmed as being a new Amazon warehouse on the Exeter gateway[11]. In Darlington, the council has awarded a contract (with contributions from the site developer) to Arriva bus services to provide a service from the town centre direct to Amazon’s distribution centre, which will ensure the timetable suits workers shift patterns[12].

Earlier this year Amazon won a refund of £3.2 million on the rateable value of its warehouse premises in Rugeley. Dating back to 2011, the premises had been consistently valued at £3.18 million, but Amazon appealed this and managed to get the valuation reduced to £2.5 million[13] triggering the refund. 

In response to criticisms over the decision, Amazon cited the role it has played in job creation and contributions to the economy across the UK, but while Amazon has brought jobs, councils have little power in rate setting (this sits with the Governments Valuation Office) and yet business rates are one of their only sources of income after years of cuts to their budgets.

There is also a longstanding issue of the disparity in rates between bricks and mortar retailers and online companies such as Amazon when it comes to rates for their premises. For example, in 2016-17 Tesco paid business rates of £700 million, while Amazon paid just £63.4 million despite generating far higher profits[14] (£8.7 billion versus Tesco operating profits of just over £1 billion)[15]. According to the figures obtained by the House of Commons Housing, Communities, and Local Government Committee, Amazon’s expenditure on business rates was 0.7 per cent of turnover, compared to 5 to 6 per cent for some of its more traditional competitors.^[16] 

Commenting on the Rugeley refund at the time, a representative of Cannock Chase Council pointed out:

 ‘Amazon describes itself as providing fulfilment centres supplying goods direct to the customer and clearly the business rates system does not reflect this, treating such sites as basic warehouses, which means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops’[17].

Amazon, with its huge leverage as a big employer can find ways to benefit from public money and investment here in the UK and elsewhere yet seems unwilling to pay its fair share in tax. It would also seem companies like Amazon have councils who want jobs and income brought into their area over a barrel - with little ability to influence the terms on which they do business.

Market power, unfair competition and lobbying

The complexity of Amazon’s business model as both a retailer and marketplace for other retailers, a logistics business and a tech giant and cloud service provider, means it can leverage its power in multiple markets and in multiple ways.

Its dominance as an online platform means small and medium businesses wishing to sell online have little choice but to engage with the platform if they want to reach consumers. For third party sellers this often means having to accept the raw end of a bad deal. Once part of the marketplace, third party sellers are often subject to bullying, high fees, and extensive data gathering on both their products and customers (which sellers themselves usually cannot access, while Amazon uses to its own benefit)[1].

These anti-competitive practices not only stifle competition but are likely leading to higher prices for customers. A recent report from the US estimates that Amazon keeps 30 per cent of each sale of a third-party seller on its site[2]. These fees are a combination of direct seller fees (usually around 15 per cent) and “optional” Fulfilment by Amazon (FBA) and advertising fees. Sellers are not obliged to take out the optional fees, but in not doing so their products are unlikely to be pushed on the website or feature in searches, meaning they are buried amongst the thousands of other products.

Similarly, third party sellers are not allowed to sell on any other platforms at a cheaper price (where maybe the fees are less, and the saving can be passed onto the customer). So almost certainly, rather than Amazon being the best on price, it is probably leading to higher prices for customers across the board. Somewhat ironically, the fees (worth USD $60 billion or £45 billion in revenue in 2019) are essentially a sales tax direct to Amazon which is then used to subsidise its other operations such as covering the costs of its logistics arm[3].

Looking to the US and the logistics market is useful as it potentially gives an indication of what may come if Amazon’s continued concentration of power and dominance is not challenged. Using its market power to coerce sellers into using its delivery operation has seen a rapid expansion of its share in the logistics market. In 2019 Amazon’s logistics operation delivered about one fifth of all e-commerce parcels, it has already overtaken the US Postal Service and is expected to overtake Fedex and UPS in terms of market share by 2022[4]. 

Amazon has also come under fire for its inability to regulate its marketplace and its Prime streaming service. Concerns have been raised about health and safety and counterfeits, with one investigation highlighting that over 4000 products on the US website had either been declared unsafe by federal agencies, ‘deceptively mislabelled’, or banned by regulators[5].

Here in the UK, MP David Lammy highlighted the use of racist language on a listing[6], Amazon did take the listing down once alerted to it, but it had been up for several months and shows the difficulty of regulating such a vast supply chain and range of products and sellers, as does the recent complaints regarding products on their website promoting hate speech towards people with Down’s syndrome[7]. Amazon have also been criticised for far-right programming appearing on their Prime streaming service and the availability of books written by known far right authors[8].

Given Amazon’s business model relies on the ability to minimise taxes, monetize the data it gathers and build monopoly power; it is unsurprising that they have stepped up their lobbying game where they can. In the US, Amazon have spent US$ 80 million (£62.5 million) over 10 years on lobbying[9] and between 2016 and 2018 the number of lobbyists they sent to Capitol Hill nearly doubled from 56 to 103[10].

It is not unusual for corporations to spend large sums of money lobbying in the United States, while this may not have a direct impact on the UK – when it comes to setting global policy agendas, it certainly does.

Amazon (along with other big tech lobbying) is having a direct impact on US lawmakers, threatening their efforts to pass digital protection laws and determine whether and how anti-trust law can and should be updated for a digital age. A recent joint report from the New Economics Foundation on behalf of the ITUC[11], outlines the influence big tech is having on shaping negotiations at the World Trade Organisation (WTO) regarding ecommerce and the digital chapters within free trade agreements, and the potential impact this could have on labour (see box 3)[12], arguing:

“Governments are promoting new rules that would further reduce their own authority to regulate in the interests of people, to the extent that they are behaving more as captives of corporations, including giant tech monopolies, than as guardians of the public interest”[13].

Criticisms have also been levelled at the ‘revolving door’ between government departments and senior Amazon employees. In the UK in June of this year, it was announced that Doug Gurr, a top Amazon UK executive would be leaving his role at Amazon and taking on a temporary advisory role to the Cabinet Offices Government Digital Services team. This follows the 2018 appointment of the UK’s top tech advisor Liam Maxwell, who left his public office role to join Amazon Web Services as Director of Government Transformation. There have been similar reports of Amazon execs advising the current Trump administration having previously worked in government[1].

Amazon has also continued to increase its spending on advertising and marketing in order to promote itself and its influence as a brand and an employer, including TV advertising campaigns in the UK which include adverts about working in their distribution centres[2]. Globally, Amazon has increased its advertising expenditure significantly over the last decade and is now the biggest advertiser on the planet. Spending on advertising has increased from $0.6 billion (£0.45 billion) in 2009 to $11 billion (£8.4 billion) in 2019. Annual spending on advertising increased 34 per cent in 2019 alone[3].

Intrusive data gathering and surveillance technology

Fundamentally, Amazon’s business model is about data. Whether as a worker, seller or customer, the data we give to Amazon for free (even if you don’t end up buying something from their site, the search alone will create valuable data), allows them to aggregate the information gathered to create algorithms and model behaviours, trade and target data for advertising purposes and predict future trends – developing technology and directing products to us before we even know we need them.

US based citizen rights advocacy organisation Public Citizen found in a 2019 report that of Amazon, Netflix and Spotify, Amazon was the most intrusive in terms of data gathering and third-party tracking. Similarly, its privacy notices lack any sort of transparency, making it hard for consumers to know what they are opting into. While it is worse in the US, even with GDPR legislation in the EU, data privacy by default is still some way from being realised[4] and what the UK’s policy will be after the Brexit transition period comes to an end remains to be seen. Bearing in mind that government departments and local authorities are increasingly customers of Amazon, this is worrying both on an individual consumer level and for society more broadly.

As discussed, for those working at Amazon, surveillance is a common practice used by Amazon to keep track of its workers. Worryingly, and of great concern to unions, is that despite concerns already raised, surveillance of workers may well intensify with Amazon winning patents to develop tracking wristbands that workers would wear and would have the potential to monitor their every move, even vibrating when they are deemed to be doing something wrong[5]. They have also been trialling the use of this wristband technology under the guise of their Covid-19 response (the wristbands buzz when you get too close to a colleague)[6].

Unions and civil rights groups in the US have also raised the alarm about Amazon’s expansion into technology such as facial recognition. ‘ReKognition’ is already being used by US law enforcement agencies across the US and by the US Immigration and Custom Enforcement agency (ICE). Campaigners fear that unless regulated, it could be used to target immigrants, BAME communities and civil rights activists by authorities[7].

Environment

Amazon’s carbon footprint is similar to that of country the size of Denmark or Switzerland[1]. A combination of its delivery network and the huge amount of energy needed to support its growing infrastructure of data centres (its new data centre complex in Ireland is projected to use 4 per cent of the country’s entire electricity grid)[2] - means it is guzzling energy and emitting carbon at a rapid pace.

Amazon has been reluctant to disclose information on its climate performance, and the sharing of its footprint and announcement of its climate pledge emerged as a direct result of the organising and campaigning of the Amazon Employees for Climate Justice (AECJ). A group of mostly tech workers initially, they have lobbied the company to get them to be more transparent about their climate impact.

Yet, despite the company committing money to finding sustainable solutions, investing in 100,000 electric vehicles and pointing to it being on track to meet targets such as 100 per cent of its energy produced by solar, wind and other renewables by 2025 - Amazon saw its carbon footprint increase by 15 per cent in 2019, and this is before its Covid-19 related surge[3].

As it increases its warehouse and data centre presence across the globe, expanding its distribution network including into air cargo and airport expansion[4]; as well as continuing activities such as helping oil and gas companies to locate, extract and sell fossil fuels using its AI and cloud technology[5] - it is hard to reconcile Amazon’s pledges on climate and its actions.

The impact of undermining efforts to tackle the climate crisis will be felt by all of us, but as unions and the AECJ have highlighted, it is usually poorer countries and communities that are on the frontline of the climate emergency. In the US, the AECJ have argued that Amazon’s air pollution is having a direct impact on communities of colour, with 80 per cent of their non-corporate US operations located in areas with a higher percentage of people of colour than the metropolitan locations of its corporate offices[6].

While Amazon may argue that it brings jobs, investment and innovation, it has been shown time and time again to be downgrading workers’ rights, depriving governments of valuable tax revenues that could be used to support public services, stifling fair competition and damaging the environment. Amazon’s business model is extractive and exploitative, they must have their power checked and be challenged to do better.