Some valuable lessons for Walmart

Philip Jennings

While the decision of the South African Competition Tribunal approving Walmart’s purchase of a 51 percent share of Massmart with limited conditions may have fallen far short of what the global union coalition believed and argued was necessary, how the process evolved should also provide some valuable lessons for Walmart.

UNI Global Union has worked with many unions around the world that represent workers at Walmart. The company is famous for its business model, which forces suppliers to cut costs or lose the world’s biggest retailer as a customer, and this was the primary reason why the tribunal proceedings attracted such attention in South Africa.

At the end of the process, the merger was granted approval, with the merged entity being compelled to establish a programme for South African suppliers to the amount of R100 million. It must also, according to the tribunal, impose no worker retrenchments for two years, not challenge the representation rights of the South Africa Commercial, Catering and Allied Workers Union (Saccawu) for at least three years and offer preferential hiring to 503 workers who were retrenched in mid-2010. The above conditions largely track what was offered “voluntarily” by Walmart at the end of proceedings.

First, it is an ominous indication as to Walmart’s possible future business practices that instead of raising these conditions at the commencement of the hearing, it waited until the final hour, depriving any intervening party of the ability to discuss them during proceedings.

There are, however, more substantive concerns that one could level against each of the conditions.

The fund for suppliers equals approximately 0.003 percent of Walmart’s annual global sales, so, while the figure may appear a large one at first glance, it is inconsequential to a company of Walmart’s size. The redeeming feature may be the inclusion of various stakeholders, including labour, in the administration of the scheme, but we will require further clarification from the tribunal as to how this may work in practice.

The prohibition on worker retrenchments for two years is far too short a time frame to offer ample comfort to Massmart employees. Of more significance, however, will be the manner in which Walmart plans to engage in labour negotiations within the two-year period, in addition to thereafter.

Indeed, in the wake of the decision, a New York-based analyst at Wall Street Strategies, commenting in relation to Walmart, has already stated: “In two years it looks like they can go to town on labour costs.”

This fear is exactly what grounded the arguments that we made to the tribunal, and why we will be closely monitoring the situation going forward in conjunction with our affiliate, Saccawu.

While the restriction on derecognition for three years does give Saccawu time to build and further strengthen its union presence in the Walmart stores, we are concerned it creates a countdown clock for Walmart, which may try to break the union as soon as the three years expire.

UNI will be in Johannesburg in July to work with Saccawu to build up the union presence in Massmart in South Africa and in the other countries where the company operates, and we are committed to ensuring that Saccawu remains the representative body for workers.

The condition regarding the merged entity being compelled to give preference to the 503 employees who were laid off during June 2010, while taking into account those employees’ years of services, does go further than the ad hoc offer of the Massmart CEO to commit to “discuss” this with the union.

It also, however, falls very far short of the recommendation by the commission that the workers be reinstated. The enforcement of this condition can only be guaranteed through close co-operation with the union, which we expect the company to agree to.

A show of goodwill from Walmart and Massmart would be the unconditional reinstatement of the more than 500 workers whose jobs were cut in anticipation of the Walmart buyout. This would send a clear message that Walmart is serious about being a good employer and a good global corporate citizen.

If Walmart sits at the table with Saccawu and Cosatu to hammer out a fair deal for workers, it will set a good precedent for the company if it has designs on further expansion in Africa. We have unions throughout the continent that we will work with to ensure they can build their organisations and ensure quality jobs for workers in the commerce sector and the rest of the services economy.

With Walmart’s well-known global reputation we are concerned that, without proper monitoring and enforcement, the conditions mandated by the tribunal are too weak to protect workers and local suppliers to Massmart. If the conditions are not met, it will be harsh retail therapy – Walmart style.

In a statement, the tribunal said its job “is not to make the world a better place, only to prevent it becoming worse as a result of a transaction”. We are not convinced that its decision will meet that laudable goal.

UNI does wish to commend the South African government for trying to develop an inclusive and just society with fair remuneration for workers, as evidenced by its active participation in this process.

Even though we disagree with the tribunal’s decision, we believe that the work of our global coalition with Saccawu and the United Food and Commercial Workers’ International Union (UFCW) of North America pushed Walmart and Massmart to offer voluntary conditions and the tribunal to impose more conditions on the deal than would have been the case had we not been present.

If we look closely at the deal, we can see how much it has changed. Walmart changed its ownership plan from 100 percent to 51 percent; it was forced to deal with a more rigorous process with the Competition Tribunal that took much longer than predicted; and it offered conditions at the 11th hour when it was never clear that they were going to do so. The above four points are clear victories, which would not, in my view, have been possible without the unions and UNI playing the central role.

Perhaps a more lasting legacy of this entire process is the debate that ensued as a result. There is a phrase, “sunlight is the best disinfectant”. It is UNI’s hope that the light shone on Walmart’s practices around the world will assist South Africa as it seeks to limit the destructive impacts that this company can have.

For UNI, our top priority is to support our affiliate unions in South Africa. We have committed to helping them grow their membership and build their power. We will hold our next World Congress in Cape Town in 2014. Walmart is also the world’s largest company and as the global union representing commerce workers, we have our work cut out for us trying to push the company to respect workers’ rights and to go beyond simply its legal obligations but to commit to being a responsible employer.

Besides the plans to help build the union power at the newly merged company, we know that Saccawu is considering what legal options may be at its disposal to put tougher restrictions on the deal.

We are now calling on Walmart to sit down and talk with UNI to agree to a global deal on its labour relations. We are committed to protecting workers’ rights and local communities around the world and we will take that cause up wherever Walmart operates or seeks to operate. However, we believe that the most efficient way to do this is not on a case by case basis, but rather to come to a general agreement on a global level and sign a global agreement with UNI that ensures the company respects basic worker and union rights wherever it operates.

We will stand with unions and communities wherever Walmart wants to expand, to make sure there is protection for jobs and local industry, and our affiliate unions would expect nothing less.

Walmart is big enough to make a positive difference if it so desired. It can chart a new course for the mother continent. We will be there, with our unions from around the world, to argue that it should.

l Jennings is the General Secretary of UNI Global Union, a global federation representing 20 million workers in 900 unions.