The Congress of South African Trade Unions welcomes the decision of the Parliamentary Portfolio Committee on Economic Development to hold hearings into the Massmart/Walmart takeover deal, which start today.

COSATU's team at the hearing will be headed by its President, Sidumo Dlamini, on Wednesday 20 July 2011.

COSATU, its affiliates and other concerned South Africans remain convinced that Walmart's takeover is not in the best interests of this country and will continue to oppose the deal.

Under the Competition Act, the Competition Tribunal must consider the competition and public interest effects of a proposed merger, and not just the narrow interests of the firms who intend to merge. In its ruling on the Walmart/Massmart merger, we believe it ignored the wider interests of the workers in both Massmart and other retailers, South African manufacturers and the country as a whole. 

Given Walmart's size and notorious business practices around the world, the Tribunal should have weighed the supposed value of Walmart's investment in South Africa against its foreseeable adverse impact on jobs and conditions, in both the retail sector and in manufacturing and other sectors that feed into the supply chain to Massmart such as agriculture, agro-processing, chemicals, clothing and textiles.

UNI Global Union, representing 20 million workers in the retail sector worldwide, has documented that Walmart has a strong anti-union attitude and a ruthless approach to keeping down wages. Its induction training devotes as much time telling workers how bad unions are as on training them on health and safety. Where workers do get organised, as in the US and Canada, it simply closes down the store or department.

Walmart has refused to sign a global agreement with UNI Global Union on fair standards for worker and union rights to organise and negotiate collective agreements. It faces numerous class action law suits, affecting hundreds of thousands of workers for, among other things, not paying overtime, gender, racial and other forms of discrimination.

Local employers in the retail sector are already beginning to attack workers, as they reposition themselves for Walmart's arrival. It cannot be pure coincidence that Pick n Pay has just announced plans to retrench over 3000 workers.

Metcash Africa Trading, with brands like Trade Centre and Friendly Grocers, have closed stores, resulting in retrenchments of almost 3500 workers within five years, whilst they have outsourced approximately 2000 jobs to labour brokers.

At Massmart itself, about a third of the workforce is made up of flexitime workers, whose hours are not guaranteed and fluctuate by as much as 15 hours a week. It has outsourced cleaning and security services and uses labour brokers to staff its stores. Most cashiers at Makro are supplied by labour brokers. At Massdiscounters, approximately 6,000 out of approximately 10,000 workers are flexitimers.

Dion and Game have unilaterally retrenched close to 3 400 workers, particularly active shop stewards and trade union members.

Given Walmart's documented track record of paying low wages to its workers, we are concerned that, after the short period in which they have promised to uphold existing negotiated agreements ends, Massmart's workforce will suffer even further downward variation of its terms of employment, as Walmart pressures the local subsidiary to cut costs and extract greater productivity. 

The Walmart/Massmart deal is not only bad for the workers; it will also adversely affect businesses and their workers in both retail and manufacturing. Shoprite's CEO has acknowledged that retailers will be forced to import more products in order to compete with the merged entity and that local suppliers and manufacturers would fail as a direct consequence of Walmart's entry.

As a giant in the retail sector, Walmart bullies farmers, manufacturers and suppliers to push down their prices and destroys rival companies by the use of ‘predatory pricing'. This has led to the collapse of many small and sometimes big businesses. It leads to the worst forms of exploitation of women and children in developing countries, where suppliers have to drive down their own costs to make a profit.

The proposed merger's impact will not just be felt by large retailers, but also by informal retailers and SMMEs that supply most of the retail sector's outlets. There has already been an increase in insolvencies and liquidation of smaller and independent players, resulting in increased concentration in the market.

The fate of South Africa's consumer goods manufacturing industry is also in jeopardy. This vulnerable sector has already seen job losses and now faces considerable risk from even more cheap imports.  The farming, agricultural and agro-processing sector is also reliant on the retail sector for its survival and growth and therefore highly vulnerable.

The proposed merger cannot be justified. It will not promote but stifle competition, as Walmart strives to dominate and monopolise the sector. 

The Portfolio Committee should consider the possible impact of the proposed merger on efforts to achieve the developmental objectives of the country and specifically:

• The monopolisation of the retail and wholesale sector, which is already dominated by a few major chains;
• The impact on the local market and upstream suppliers, manufacturers and service providers, including small businesses and township traders;
• Walmart's track record in other countries where its entry has led to job losses;
• Walmart's terrible industrial relations history and reputation.

COSATU has taken action under Section 77 of the Labour Relations Act to allow for protest action against the Walmart takeover. We are ready to mobilise our members in the streets and in strike action to defend jobs and workers' rights.

Statement issued by Patrick Craven, COSATU national spokesperson, July 19 2011

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