South African Unions: Wal-Mart "One of Worst Companies in the world."

Organized Labor Vows To Fight American Retailer

by Al Norman

It was hardly the graceful entrance into South Africa that Wal-Mart had hoped for.

As soon as the U.S-based retailer announced this week that it was in talks to buy the South African Massmart chain, the deal was trashed by prominent unions in South Africa.

In a press release dated September 28th, the Congress of South African Trade Unions (COSATU), which claims to represent nearly 2 million workers, referred to Wal-Mart as "one of the worst and stubbornly anti-union companies in the world." COSATU compiled the following list of union grievances against Wal-Mart:

• Wal-Mart is a known anti-union company with training and toolkits for managers to keep the workplace union-free.
• It took almost fifty years for workers to successfully get Wal-Mart to recognize a union at one of their US outlets.
• It has closed down departments and stores in North America where workers have successfully unionized themselves.
• By July 2008 the company faced more than 80 lawsuits in connection with wages, overtime and hours violations, most of it class actions, with more than 10,000 workers affected in many of the cases.
• It currently faces the largest class action on discrimination of women with more than 1.5 million women workers being part of the action.
• It pays women less then men and women are less likely to be promoted than male workers.
• It has been in court for racial discrimination against African-Americans truck drivers and Muslim employees of West African origin.
• In the 2008 US Presidential elections it was exposed to have actively co-erced their employees not to vote for Obama - the reason, Obama will make it easy to for unions to get into the workplace.
• It has been listed in Human Rights Watch reports for its aggressiveness of its anti-union activities.
• In the US, wage levels at Wal-Mart has been found to be between 26% -37% lower than the national average.
• In 2008 it was fined 2 billion US dollars for more than two million wage related violations.
• Recently it was compelled to pay 34 million US dollars in unpaid back wages.
• Today in the US, it still represents the main opposition to a bi-partisan Free Choice Act that will allow workers to form and join unions easier.
• It conducts illegal surveillance on its employees to root out any attempts to unionisation.

In addition to anti-union activities, COSATU warned of Wal-Mart's economic impacts on the fragile economy of South Africa. "It is not only the anti-union attitude that concerns us, also the impact that the general operations of Wal-Mart have on local economies, distributors, suppliers and manufacturers," COSATU wrote. "While Wal-Mart has been touted as the cheapest retail outlets, new studies increasingly show that basket comparisons between Wal-Mart and competitors show the opposite, and this has seen a shrinking of its market share in the US, their biggest market. This might be one of the considerations for this move into Africa."

"Wal-Mart has become so powerful, COSATU notes, "that it dictates to their suppliers at what price they (are) prepared to buy goods, and (business) failures have seen many suppliers, distributors and manufacturers going down. But more important, this `reverse auction` relationship it has with suppliers has seen not only the collapse of local manufacturing in many instances, but has also fueled the use of child labor and extreme low wage labor in other parts of the world where they source their goods from, like Guatemala and Bangladesh."

COSATU fears that a Wal-Mart take-over of Massmart will be a major setback for the local manufacturing movement in South Africa. "If this deal goes through," COSATU says, "it will be a severe blow to all our intentions and attempts to build and develop local manufacturing, it will be a set-back for our buy local campaign and can lead to further increased unemployment not only in wholesale and retail, but also in other sectors of the economy."

COSATU, which was founded in 1985, say only a few executives at Massmart will profit from the American takeover . "Why would the management tout this as a great deal?" the union asks. " Who are to benefit? Not the economy, not the workers, not even some of the shareholders, but top management and only those with astronomical amounts of shares. Top management will not only make millions from the sale but will immediately after the sale be offered large amounts of shares. Really, if anybody is to gain it will be the same top management that will try and sell the deal to its shareholders and the country as a great investment."

The Wal-Mart offer has also drawn fire from the South African Commercial, Catering and Allied Workers Union (SACCAWU), which said Wal-Mart's business model of procuring from other countries would undermine the precarious local manufacturing industry in South Africa. "For sometime now, SACCAWU has not only anticipated this intention of Wal-Mart but we have also actively participated in international campaigns against Wal-Mart...Thus, a takeover of Massmart by Wal-Mart is a matter of serious concern to the SACCAWU."

"We as SACCAWU, will not allow any erosion of workers rights and benefits gained over decades through bitter struggles," the union promises. "We will not be silent and watch the destruction of local procurement polices we are fighting for, we will not allow further destruction of the local manufacturing go unchallenged."

But how will these unions stop Wal-Mart?

SACCAWU says that it will ask the public to support a "campaign against Walmartisation" of the sector, and if need be, will ask the government's Competitions Commissions and Minister of Economic Development "to ensure that a deal so hostile to national interests and the developmental objectives of our country is not undermined." In effect, organized labor is threatening to extend their ant-Wal-Mart campaign "to the entire labor movement and civil society of the country." "We will not sit-back," the unions say, "but (will) engage in a determined fight-back including calling on our international allies to support this struggle."

Wal-Mart has told the South African media that it contacted COSATU and SACCAWU leaders several days ago to discuss the takeover bid. Business Day quoted Wal-Mart International as saying, "We respect and honor pre-existing union relationships and are committed to abiding by South African labor laws." That will be of little comfort to the scrappy unions of this African nation.

With same store sales in the U.S. in negative numbers, and local site fights extenuating their production of new stores in America, Wal-Mart is increasingly dependent on international sales to keep its enterprise afloat. The retailer's standard form of entering a new market is to partner with, or takeover, an indigenous company as cover. Massmart becomes the vehicle to open up Wal-Mart markets to nearly 1 billion African consumers.

The business media is already predicting a 'lengthy battle' for the wallets of South African consumers. By announcing its official plans now, Wal-Mart has turned over a very unpleasant union rock.

Al Norman is the founder of Sprawl-Busters, and the author of The Case Against Wal-Mart.