Prof Stefan Gössling, of the School of Business and Economics at Linnaeus University, on the pros and cons of gratuities
My theory is that every British person has one pet peeve Americanism. Perhaps it’s the phrase “pet peeve”. Maybe it’s people saying, “Can I get a coffee?” when, “Can I have … ” makes more sense. Or maybe it’s a custom, such as tipping. I asked Professor Stefan Gössling of the School of Business and Economics at Linnaeus University in Sweden, whose study explored the impact of tipping on social welfare, whether it’s a good thing to do.
Hi Stefan! Where are you?
Is tipping the norm there? It is in London, and it’s creeping up from 10% to 12.5% and sometimes 15%. The other day I left 20%
Germany is a tipping country; Norway and Iceland are moving away from it.
I read that the Norwegian labour unions discourage tipping, saying it promotes weak wages and doesn’t count toward pensions
And most people tip by card there, which makes it difficult to enforce the regulation to deduct tax from tips before they’re passed on. Norway has a high minimum wage, too. And our research showed that customers prefer tipping with cash, perhaps because they see it as a tax-free gift.
I can see why, although I think paying taxes is chic. What about service charges? It’s illegal for UK employers to keep tips left by card, but service charges are often used to cover costs.
Well, an average restaurant makes about 5% profit. So in North America, service charges pay staff, and everyone accepts it. It’s the European model to price everything into the menu.
Including a liveable salary for staff?
Not always. In Spain, the rate is about €1,000 (£850) a month. Few people can live on that. In Switzerland, it’s double.
And they don’t tip in Switzerland. It can’t be a coincidence that tipping isn’t customary where staff are well paid. Should ending tips be the goal?
Or it can be a good wage and tipping. People like tips, it makes them feel good.
But isn’t it discriminatory?
Studies show that if you’re a good-looking blond woman, you’ll earn more tips. You could call that a racial bias, or a gender bias. I would call it biology: men like to impress attractive women. But knowing that means it’s easy to find mechanisms to increase tips. Everyone loves a friendly waiter. A smile is a great weapon.
Doesn’t sound wholly fair, though.
It’s going to be hard to find any job where your personality doesn’t make a difference. And the monetary difference between the best- and worst-performing is small.
Punters rarely have the knowledge to judge performance-related pay – it’s not the waiter’s fault if the kitchen is slow. Should customers have this power?
It’s only an issue of power when staff depend on tips to survive.
Do you tip?
Yes, about 10%.
Is 10% the magic number?
It’s made up, based on the country’s norms and economy. But it can change, so it’s up to us to decide how we want this system to develop. If it goes in the direction of 20% tips …
Uh-oh, did I overdo it?
… we could be undermining working conditions because employers won’t pay more than the minimum. Then we’re approaching the US model. As consumers, we should be aware that we might be pushing that system to exist.