The real face of Wal-Mart

Posted on November 20, 2010


(First published November 12, 2010)

Wal-Mart Stores Inc is a corporate bully and a voracious predator whose presence in any community is beneficial only to the shareholders of the corporation and injurious to the public good. That sums up the trade union view of the world’s biggest retailer.

The South African Commercial Catering and Allied Workers’ Union (Saccawu), on November 11, provided evidence for this view in a submission presented to the competition commission. The submission has the support of a growing global coalition against Wal-Mart and its delivery to the commission amounted to the first serious shot in a battle that promises to be long, hard and bitter.

It is also an international battle against the 48-year-old Arkansas-based corporation that now boasts 8 692 retail outlets in 15 countries. Africa is the only continent that does not yet have a Wal-Mart presence.

And the proposed purchase by Wal-Mart of at least a controlling interest in Massmart is not merely a South African issue: while Massmart — Makro, Dion, Game, Builders Warehouse etc — has 263 stores in South Africa, it also has another 25 stores elsewhere in the sub-Saharan region, ranging from Botswana to Ghana, Mauritius and Zambia.

The Wal-Mart strategy — as it has been throughout its spread outside the United States — is to use its massive financial power to buy out existing operations, in fact swallowing what would have been some of its competition had it started from scratch. The unions tend to see this as a parasitic exercise where the money spent on buying a going concern is soon recouped in profits that continue to be repatriated.

This is a criticism that was leveled at the much lauded R30 billion purchase of Absa by Barclays Bank in 2005. But, in the case of retailing, the financial power and the now global reach of Wal-Mart, enables the corporation to put pricing pressures throughout the supply chain, from farms to factories in any of the “55 different banners” it admits to operating under.

As the unions see it, this “bullying” of suppliers and producers results in fewer jobs, lower wages and worse working conditions. It also means that other retailers are forced to try to match the prices of Wal-Mart operations, so adding to the “race to the bottom” in terms of wages and conditions.

However, under the slogan: “Save money. Live better” Wal-Mart and its supporters claim that Wal-Mart’s ability to provide the lowest prices is to the benefit of the consumer. It may be, but then only initially, say the unions.

They point out that the overall effect of the march of Wal-Mart Stores, trading in a variety of guises from Walmart and Sam’s Clubs in the US to Asda in Britain, has been anything but beneficial. A study by a team from two universities in Chicago, published in January this year, revealed that when a Wal-Mart store opened it tended to force many other competing stores in the area out of business, with the loss of full-time jobs in those stores being roughly equal to the jobs created by the Wal-Mart operation.

According to the unions, many of the Wal-Mart jobs are also casual and, in the US, Wal-Mart still does not permit its workers to join unions. The company also advises managers on ways to combat the influence of unions, but accepts them when, as in Europe and elsewhere, it effectively inherited a unionised workforce when it bought out existing retailers.

These points were raised in discussions among delegates from the 900 services union affiliates of the UNI Global Union when they met in Nagasaki, Japan, between November 8 to 13. UNI Global brings together 20 million organised workers in 150 countries.

It was at the congress that Sharan Burrows, general secretary of the International Trade Union Confederation (ITUC) issued the warning: “Corporate bullies beware.” She did so when she announced that, in January next year, ITUC would single out a “corporate bully” to be targeted for “special attention” by the International labour movement.

On one level, this is evidence of the growing realisation within the labour movement that unions have been losing ground in what has become an increasingly borderless world; that organised workers have remained largely hamstrung by national boundaries while capital has flowed more freely than ever before. In the current climate, Wal-Mart is a clear front-runner to be targeted, with the object of winning a “global framework agreement” from a global corporation that employs nearly 2 million workers.

Core to such an agreement would be the right of workers to organise and to form unions. It is the first step by the labour movement towards what is seen as the long-term goal of equal pay and conditions on a global scale.

“We already have such an agreement with Shoprite and it provides an enabling environment for workers in other countries where Shoprite operates,” says Saccawu deputy general secretary, Mduduzi Mbongwe. A similar agreement is now being sought from South Africa’s Pick ‘n Pay as it extends its footprint, which Shoprite has already done, north of the border.

However, the idea of such a “level playing field” undermines the profit-driven competitive dynamic of the present economic system, a system Wal-Mart has exploited to the full. UNI Global points out that Wal-Mart has built its competitive advantage on “low wages, poor benefits, and a squeeze on producers”.

But there is nothing new or unique in this. The difference is that Wal-Mart, as a product of the free market system, has grown to the extent that its annual turnover now exceeds South Africa’s gross domestic product by nearly $110 billion.

It is, therefore, an example of how to succeed in the dog-eat-dog world of capitalism. So while many in the unions may not realise it, the battle they have taken on against Wal-Mart and for global equality requires the transformation of the system itself.