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Opinion: As we gradually return to normal, we need to stop the creeping Amazon-ification of our economy

Everyone should have the right to a living wage, job security and decent work conditions, writes Victor Duggan.

Victor Duggan Economist

WITH A WHOLESALE switch from bricks-and-mortar retail to online shopping accelerated by Covid-19, internet behemoths like Amazon have been among the big winners over the past 16 months.

While we’ve all been stuck at home, some of us have been lucky enough to have disposable income, but nowhere to spend it. A one-click purchase and a package swiftly delivered to your door can be quick thrill, a small luxury, or sometimes even an urgent need.

Amazon is not the only thing that’s been taking off in a rocket. Jeff Bezos, Amazon’s founder, world’s richest man, and plausible Lex Luthor super-villain impersonator has boarded a manned space flight this afternoon, travelling to the edge of space for approximately 11 minutes on the first manned space flight of Blue Origin, his hobbyhorse outfit aiming to bring space tourism to the masses – well, more accurately, to the super rich. 

‘What´s the harm?’, you might wonder, if an innovating entrepreneur gets filthy rich by providing a service that keeps consumers coming back for more. For good or ill, Amazon has revolutionised retail. Even if you don’t use it to buy stuff, it’s often useful to browse and compare prices. We have information at our fingertips that previous generations could only dream of.  Arguably, the rise of the internet – as well as cheaper imports from Asia – has helped keep a lid on price increases for all manner of goods over the past two decades. Lower prices, more choice and greater convenience have all been a boon to consumers.

But, does it come at a price?

Certainly, Irish retailers would argue. For decades, independent shops on the high street have been under pressure from chain stores, who have themselves had to compete with or locate in out-of-town shopping centres, and big-box retailers like Ikea more recently. The shift online has long been underway, but the pandemic surge has accustomed us to the convenience of one-click shopping for groceries and a whole range of other goods. That won’t be sustained as things normalise post-Covid, but neither is it likely to go back to business as usual. Amazon’s position as global leader will only to be further entrenched.

One up-shot of Brexit is that Amazon is to establish a new 1,000-job ‘fulfilment centre’ in Dublin. With some 5,000 existing employees, the company is already one of the largest private sector employers in the country. But fulfilment centre jobs will be a different beast to those in data centres or the company’s Web Services arm. 

Lots of people are going to be desperate for any job they can get by later this year, while consumers might not see any downside to and faster deliveries. But, workers beware! One of the ways Amazon manages to keep prices so low is by squeezing every last drop out its warehouse workers, treating them as expendable and crushing efforts to organise in trade unions. Fair game, if it keeps prices low, some might say. But, do we really want people in Irish workplaces –’pickers’ in fulfilment centres, or delivery drivers, for example – to be under such time pressure to meet performance targets that they have to urinate in plastic bottles because they can’t take time to use the bathroom? 

There has been much lauding of ‘essential workers’ during the pandemic. Not only were we clapping frontline health workers, but many of us have developed a newfound appreciation for workers keeping the show on the road: stacking supermarket shelves, delivering food and, yes, fulfilling Amazon orders. We have a duty to ensure the dignity of all Irish workers.

Another way Amazon manages to keep prices so low is that, by virtue of its massive size, it has massive power to drive down prices offered by publishers and other suppliers. We are unlikely to see an upsurge in Irish businesses selling products to Amazon just because they have a physical presence here. And, those that do are likely to be forced to sell at rock bottom prices. 

Not only has the company been accused of using sharp practices with its workers and suppliers, it also pays little or no tax on its super-size profits. The company recorded a record €44bn sales in Europe in 2020, up a third on 2019, but didn’t pay a cent in corporation tax. Why? Because it is believed to have shifted funds between various affiliates in its corporate structure so as to record a €1.2bn in its Luxembourg-based EU HQ. For once, Ireland is not the tax villain of the piece. Globally, the company more than doubled its profits to $21.3bn for the year. 

We have been conditioned to think of ourselves as consumers first, citizens or workers a distant second or third. We all have so much going on in our lives, with so many competing demands for our time and money, that it’s easy – maybe too easy – just to take the cheapest, most convenient option. Hands up: I do it myself.

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But it’s important to consider that our penchant for fast fashion, for instant gratification at bargain basement prices, has a hidden cost. As we gradually return to normal, we need to stop the creeping Amazon-ification of our economy.  

Individual consumers can make a difference by voting with their wallets. But more fundamental changes need to be voted through the Dáil as part of a wider agenda of decent work and fair taxation. We need new legislation to protect gig economy workers; ensure the right to disconnect; and, most important of all, give all workers the right to collective bargaining. Everyone should have the right to a living wage, job security and decent work conditions. 

As for big business, it needs to pay its fair share of tax. If reform of Ireland Inc’s corporate tax regime is to be forced upon it – which seems more likely amid global pressure after Ireland was one of just nine countries out of 139 to hold out on the recent historic OECD deal on corporate tax – why don’t we seize the opportunity for progressive tax reform and re-think our national business model? 

Once, Ireland was a low-cost manufacturing centre. But we moved up the value chain when we could no longer compete on wages. Rethinking corporation tax is our next big challenge.

For the last three decades at least, we have been a low – or sometimes no! – tax paradise for multinationals, but we’ve never really put in the hard yards to harness their dynamism to bolster our indigenous industry, our start-up ecosystem or our research centres of excellence. This should be central to a new, progressive industrial policy. We can and must move up the value chain again. Because, the game has changed.

Victor Duggan is an economist.

About the author:

Victor Duggan  / Economist

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