By Siddharth Cavale
(Reuters) – Unions at Diageo <DGE.L> are demanding a 5% pay rise for workers due to go on strike in Scotland later this month and believe the stoppages will cost the drinks company 1 million pounds ($1.2 million) a day, a source familiar with the matter said.
A Diageo spokeswoman confirmed that the unions had initially demanded 5% pay hikes when talks started in May, but had since come down to 3.5%.
The source said that the unions “never” agreed to settle at 3.5% and that their previous demand still stood.
Members of Scotland’s Unite and GMB unions, who make up half of Diageo’s 3,000 Scottish workforce, are set to go on rolling strikes at the company’s Cameronbridge, Leven and Shieldhall sites in Scotland between Sept. 17 and 27, after talks with Diageo collapsed last month.
The unions on Aug. 30 again rejected Diageo’s offer to increase wages by 2.8%, after rejecting a prior offer of 2.5%. Last year, workers received a 3.2% hike.
Bob MacGregor, regional industrial officer of Scottish union Unite, has said previously that production would come to a standstill if the strikes go ahead.
“We are willing to listen to any offer from the company above what they offered last year… but what our members won’t accept is a pay cut,” MacGregor told Reuters.
The Diageo spokeswoman said the union’s estimate that the strikes would cause losses of 1 million pounds a day did not have “any ground in reality” and that the company was unable to verify the number.
The unions have said their demands should be taken in the context of the world’s largest spirits maker’s annual profits, which were 4.2 billion pounds ($5.19 billion) last year.
The unions have also voiced frustrations over Diageo’s plan to build a 150 million pound Johnnie Walker visitor attraction in Edinburgh, as part of an investment in Scottish whisky tourism.
Diageo has 29 distilleries in Scotland and exports 80% of the whiskey it produces there to 180 countries in the world. The company is the single biggest exporter of whiskey from Scotland and produces for brands including Johnnie Walker, Lagavulin and Talisker at the three sites.
Diageo’s pay offers year-over-year take into account the Consumer Price Index (CPI) – regarded as the UK’s rate of inflation – and the Retail Price Index (RPI), the spokeswoman said.
UK CPI stood at 2.1%, while RPI was 2.8%, in July.
“If you look at our offers, they are in line or above and what we consider to be generous and normal,” the spokeswoman said, adding that the company had contingency plans in place for the strike actions, but remained committed to seeking a resolution.
The unions and Diageo are due to meet again on Monday.
(Reporting by Siddharth Cavale in Bengaluru; editing by Patrick Graham and Susan Fenton)