The rot is spreading. The American practice of mandatory tipping, a tax on social interaction that has metastasised across the Atlantic, is now threatening the efficiency of the British service economy. Experts warn that the creeping entitlement of service workers for a 'living wage' subsidy from customers, rather than employers, is a textbook case of market distortion.
From coffee shops demanding a 20% gratuity for handing over a latte, to restaurants pre-adding a 'discretionary' service charge of 12.5%, the British consumer is now being asked to subsidise payrolls. This is not generosity.
This is a capital flight from the balance sheet to the customer's wallet. The Bank of England should take note: if this trend continues, we will see a 'gratuity inflation' that feeds into broader wage pressures. The solution is simple: pay staff a proper wage and scrap the tip.
Otherwise, we are all paying for the inefficiency of the labour market. The City of London knows a bad debt when it sees one. This is bad debt.
