North American food retailers are under pressure to cut costs and employees are taking the brunt of their efforts, but in Europe trade unions have, so far, prevented the same trend taking root. Dave Robertson investigates the controversy surrounding unions in the food retail sector.
Supermarkets across the US are renegotiating contracts with workers to limit pay and benefits in an attempt to keep pace with Wal-Mart. The largest food retailer in the US, Wal-Mart has labour costs about a third of unionised retailers and this, along with its ability to squeeze supplier costs, has made it very difficult for traditional supermarkets to compete.
This boiled over into a bad-tempered industrial dispute in southern California two years ago that affected 852 supermarkets. The United Food and Commercial Workers led the four-and-a-half month strike after Kroger, Albertsons and Safeway tried to reduce employee benefits.
In the end, the union backed down and accepted a reduction in benefits. Since the strike ended supermarkets across the US have been quietly renegotiating contracts with workers. Pay and benefits are slipping away and workers who once earned US$20 an hour are now lucky to get $8.
Wal-Mart is routinely blamed for this change. The company vigorously maintains its anti-union stance and once closed a store in Canada that threatened to unionise, claiming the store was unprofitable.
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By GlobalDataWhen 11 meat cutters at a Texas Wal-Mart voted to form a union, the company got rid of meat-cutter jobs across the US and started buying pre-packaged meat instead.
Europe, by contrast, remains heavily unionised. All the major British supermarkets, for example, have unions in-store but moves have been made to limit their presence in supply depots and distribution centres.
Asda, a Wal-Mart subsidiary, has been blamed by unions for attempting to sneak its parent company’s tactics into Europe. It was fined £850,000 (US$1.57m) by an employment tribunal in February after offering depot workers pay rises if they gave up their collective bargaining rights.
Asda had used a lobbying company called Portland Public Relations, run by a former deputy press secretary to Tony Blair, to launch a campaign against joining a union.
Following this ruling the GMB has decided to push for full national negotiating rights for depot workers across the UK. It threatened a five-day strike in the middle of the lucrative World Cup trading period last month and this was sufficient to force Asda to give the union most of what it wanted.
Steve Pryle, a spokesman for the GMB, said: “The desire to level the playing field between workers and employers is universal and unions, like weeds in the garden, just can’t be kept down.”
But in the US, food retailers appear to be armed with more potent weed killer. Supermarket staff are becoming less skilled and more transitory, raising the question of whether food retailers are pursuing false economies.
Staff lacking motivation, training, education and product knowledge can be a major problem for retail organisations. Also, low pay encourages job-hopping – Wal-Mart, for example, needs to hire 12,000 people a week to replace departing staff.
At present, European supermarket workers have kept the pay-limiting practices of American retailers at bay but competition pressure is sure to keep companies looking for a backdoor way to introduce them in the future.