Guardian undercover reporters find world where staff are searched daily, harangued via tannoy to hit targets and can be sacked in a ‘six strikes and you’re out’ regime
Source: Revealed: how Sports Direct effectively pays below minimum wage
Nice example here of Sports Direct exploiting their monopsony power as the major employer in a small town, a determinant of monopsony power in labour markets. Alan Manning (LSE) suggests that all employers exert some degree of monopsony power as workers are reluctant to move for the fear of the unknown. This power helps firms to drive down wages lower than they should be in a perfectly competitive market.
Clearly the low cost, low price model comes at a cost….to the workers…minimum wages, zero hour contracts, and little job security. Whether or not these findings make a difference to the brand and sales ultimately depends on whether existing customers read and react.
Economics Department Blog 