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Monday, 08 August 2011 00:00


The month of August is known as women’s month.  Women’s Day is held on the 9th of August and is celebrated to honour the bravery of the women who marched to the Union buildings on the 9th of August 1956, to protest against the hated pass laws imposed on them during Apartheid. SACTWU thanks and pays tribute to these women, and all other women who have paved the way for our future women leaders

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Monday, 01 August 2011 00:00

‘Walmart effect’ on Mexico shows the true price of bargains

Etienne Vlok and Simon Eppel   August 2, 2011

In 2004 the Mexican Federal Competition Commission took the extraordinary step of allowing collusion in the Mexican retail market when it approved the establishment of Sinergia, a buying co-operative comprised of Mexico’s second-, third- and fourth-largest retailers.

Why would a regulator that serves to defend competition endorse anti-competitive behaviour? Simple: Walmart. For Walmart is the undisputed leader in the Mexican retail sector and the commission was trying to correct massive distortions of power between Walmart and its competitors, particularly around pricing.

As the New York Times noted at the time, “the joint purchasing company (Sinergia) is an attempt to match Walmart’s influence over suppliers”.

During South Africa’s Competition Tribunal hearings into the Walmart-Massmart merger, Walmart dismissed concerns about the company’s effect on local competition and employment by referring to its alleged effect in Chile, where it has been operating since 2009. However, fundamental flaws were identified with the Chilean example. We believe a much better indicator of the likely medium- to long-term effect of the company on South Africa can be found with Walmart’s experiences in Mexico.

Walmart entered Mexico in 1991 when it purchased a local retailer, Cifra. For the first few years of its presence, Walmex – as the company is known in Mexico – grew slowly. However, since 2005 when the company had only 488 stores, Walmex has seen spectacular growth, reaching a total of 1 364 stores by December 2010. In comparison its nearest competitor, Soriana, had just 508 stores, and a further 300 convenience stores – many of which are franchises.

Even with the buying co-operative, Walmex’s competitors cannot keep up. Walmart’s financial and buying power are simply too great. The company has invested the equivalent of R8 billion in its Mexican operations in 2011 alone, a trifling amount for a colossus like Walmart – whose sales in 2010 were more than R2.8 trillion. This is difficult for Soriana to match, with sales of only R55bn in 2010 (and would be similarly difficult for South African retailers, whose market leader, Shoprite, had sales of R67bn in 2010). Walmart’s unparalleled financial clout means it is peerless in its power to invest in its operations and grow vis--vis its competitors.

What of the effect of Walmart’s pursuit of its low-price strategy? French economist Cedric Durand has linked Walmex to a dramatic increase in imported goods into Mexico in an article published in the Cambridge Journal of Economics:
“After 1997, we observe a faster increase in Walmart’s imports in real terms compared with its competitors’. If we look at the imports-to-purchases ratio, we see that all the enterprises have been significantly increasing the share of imports in their purchases, but also that Walmart has shown a much more dramatic evolution: from 20 percent in 1997 to more than 55 percent in 2002 and 2003.”

Walmart’s pursuit of low prices significantly affected the total levels of imports into Mexico. In this, Durand’s findings echo similar conclusions by the Economic Policy Institute (EPI), which analysed Walmart’s effects on imports and jobs in the US. It concluded that Walmart’s imports alone were responsible for destroying 200 000 jobs – including 130 000 manufacturing jobs – between 2001 and 2006. The destruction of manufacturing jobs is significant: a strong manufacturing industry is a key driver of development.

That Walmart’s massive bargaining power and its importation practices lead to increased job losses is borne out by the Mexican evidence. For instance, Walmart expert and professor at the University of California, Nelson Lichtenstein, has said: “Walmex has had a devastating impact on Mexican manufacturing. Although Wal-mart initially claimed that it would incorporate local Mexican firms into its supply chain, the famous squeeze on profits and labour never let up.”

He quoted an executive of a small clothing manufacturer as saying: “Walmart has driven many suppliers out of business. Walmart maintains its profit margins… They never reduce their margin. They do pass on savings in price, but at the expense of the manufacturer. You can increase efficiency a certain amount, but… for example, they may tell you, ‘We’re going to sell shirts at a 40 percent discount – you, the manufacturer have to cut your price 40 percent.’ So the consumer benefits, but they’re driving out of business the manufacturers that provide jobs.”

Even when Walmex purchases goods locally, it squeezes manufacturers to continuously reduce costs. This usually ends in manufacturers having to import the goods they supply, as they cannot manufacture at such low prices, legally anyhow.

Clothing makers and workers have not been the only casualties of Walmex. Many other sectors have been affected. For instance, while productivity has increased within the soaps, detergents and surfactants industry in Mexico, employment in that industry has decreased by about 20 percent, largely as a result of Walmart.

So, what does Mexico have to teach South Africa about Walmart?

First, the financial power of Walmart is likely to benefit Massmart in South Africa, with significant effects on competition. Massmart will be leveraged into a position of market dominance (both within and beyond the liquor, building material and general merchandise markets where it currently leads) by virtue of Walmart’s unmatched financial power. Concentration and consolidation of the retail industry will occur and barriers to entry for new and smaller competitors will rise.

Second, Walmart is likely to increase the scale of problems facing South Africa, including job losses, unemployment and deindustrialisation. As Durand has shown for Mexico, competitor retailers will mimic Walmart’s practices (the Walmart effect) to better compete with the company. Greater imports will occur as competitors seek the cheapest prices.

In instances where local procurement initially occurs, Walmart and its South African competitors will squeeze local manufacturers even further than they already are squeezed causing many local companies to restructure or fold. Jobs will be lost (both among local manufacturers and among retailers who will struggle to match Walmart’s prices and their growth), offsetting any jobs that Walmart creates.

The possibility of lower prices from Walmart may be attractive, but at what cost? Low prices cannot come at the expense of local manufacturing and retail jobs and increased concentration in the retail sector, among others.

Mexico’s experience of Walmart shows that the company poses real challenges to South Africa, particularly in key socio-economic matters. We should tread with great, great care.

Etienne Vlok and Simon Eppel work for the SA Labour Research Institute, the research arm of the Southern African Clothing and Textile Workers Union.

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Sunday, 06 March 2011 09:28

Declaration of the SACTWU National Bargaining Conference 2011

The Southern African Clothing and Textile Workers’ Union (SACTWU) held its National Bargaining Conference from 4 to 6 March 2011, in Durban. The primary purpose of this Conference was to consolidate the union’s wage, employment and productivity demands for the 2011 round of wage negotiations.

Two hundred shop stewards representing over 1,500 workplaces in the clothing, textile, footwear, leather, distribution, service products and allied (CTFL) sectors participated in the Conference.

Our consolidated wage demands will now be reported back to our 99,000 members in workplaces and SACTWU branches across South Africa, before it is tabled to employers, where-after we will release details thereof to the wider public.

Conference delegates emphasised that they demand a living wage and firmly rejected any attempts to downward vary terms and conditions of employment of workers in the industry.

This year’s negotiations will cover over 120,000 workers in the CTFL and related sectors.

The Conference also considered a wide range of other challenges faced by workers in the CTFL industry and the broader economy. These include the proposed labour law amendments currently under discussion at Nedlac. In this regard, the Conference was addressed by the Minister of Labour, Nelisiwe Mildred Oliphant. 

The Minister assured delegates to the Conference that section 42 of the Employment Equity Amendment Bill was not intended to negatively affect coloured or Indian workers. We welcome this assurance and call on the Department of Labour to ensure that it finds expression in the final version of the bill, prior to it being tabled in parliament.

While the Minister’s assurance gave delegates a level of comfort, we are concerned about the continued negative utterances of government officials, especially some in the Department of Labour, on this matter. We therefore urgently call on the Department to table a revised amendment bill at Nedlac to address the problems with this clause or alternatively to withdraw the bill completely. SACTWU, working in partnership with COSATU, will resist any attempts to disadvantage coloured and Indian workers or any other worker for that matter.

The Conference has further mandated the SACTWU national leadership to explore different pressure options to ensure this happens, including the possibility of rolling mass action at Department of Labour offices across South Africa.

Conference firmly rejected the ‘Halloween-like’ utterances by Solidarity with respect to the Employment Equity Amendment Bill, and cautions against the deliberate attempt to drive race division between African, coloured, Indian and white workers. Our objective is a united, non-racial South Africa, not enclaves of race exclusivity.

Delegates also called on Business to end its boycott of the labour law amendments negotiation process at Nedlac. SACTWU and its members await the outcome of COSATU’s investigation of whether or not a Section 77 LRA protest action notice should be submitted to Nedlac to force Business to the negotiation table, but committed to support mass protest action should such a notice be submitted and our demands not addressed.

The Conference also resolved that SACTWU and its members should firmly focus its action and interventions with regards to the labour law amendments on ensuring that labour brokering in all its forms are banned. In addition, the Conference called for the labour law amendment negotiations to address the ‘Fryer’s Metal effect’, which constitutes an attack on workers’ rights. The Conference further called for the criminalisation of non-compliance with the country’s labour laws.

Delegates attending this annual conference also considered the forthcoming local government elections, including the challenges faced in several regions and provinces in this regard. The Conference reiterated SACTWU’s support for COSATU’s approach to the elections.

The Minister of Economic Development, Ebrahim Patel, addressed the Conference on the New Growth Path (NGP). The Conference noted the developments in this regard, and affirmed its support for COSATU in the NGP negotiations.

The COSATU General Secretary, Zwelinzima Vavi, addressed the Conference on several political, economic and social challenges facing the working class, including the proposed merger between Walmart and Massmart. Delegates endorsed the call to resist this merger, citing Walmart’s  poor industrial relations and sourcing practices, which will not only affect South African workers disastrously, but also the entire local and regional economy. The Conference reiterated its concern that the Competition Commission has failed to adequately address public concern issues in its recommendation to the Competition Tribunal to approve the merger unconditionally.

Conference further considered developments with regards to job losses in the industry, welcomed the firm support that government has rendered to our industry since the installation of the new Cabinet in May 2009, reflected on what competency evaluation systems to introduce for shop stewards’ education,  endorsed steps to strengthen the union’s membership growth campaign, critically reflected on an overview presentation of the current state of the economy and its possible impact on our collective bargaining activities.

Conference spent considerable time in commissions, reflecting on the challenge of how to improve the services that SACTWU renders to its members. The outcome was a wide range of proposals of how to improve membership service delivery, and these will now be tabled for further refinement and an implementation strategy at the union’s next National Executive Committee (NEC), to be held later in March this year.

Conference called on all SACTWU members throughout the country to effectively prepare themselves for the upcoming round of substantive negotiations in our industry, and to be on high alert to confront employers head on, should they refuse to grant us our demands.

Issued by Andre Kriel, General Secretary, SACTWU

For further comment, kindly contact Bonita Loubser, SACTWU 2nd National Organising Secretary on 082 8007142, or Chris Gina, SACTWU 1st National Organising Secretary, on 082 9409456

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Thursday, 03 February 2011 00:00

2011 Sactwu Bargaining Conference


The SACTWU Bargaining Conference is the union’s annual gathering where mandates for upcoming wage negotiations are considered and consolidated and where new policy issues are explored.

This Conference is attended by approximately 200 shop stewards and staff, from all parts of the country and representing all sectors of the union. The Conference is preceded in February where mandates are collected from each workplace organised by the union, consolidated into regional sectoral proposals and then formulated into national wage proposals at the Bargaining Conference.

The Bargaining Conference signals the start of the union’s annual bargaining season at national level. The union’s sector negotiators, researchers, admin and technical support staff and elected national secretariat has met in Cape Town over three days from 30 January 2011 to 1 February 2011 to prepare implementation of the union’s POA for 2011, of which our wage bargaining program is a central pillar.

This year’s National Planning Meeting (NPM) was attended by 35 staff members under the theme: “What is to be done?” The outcomes of this NPM will be tabled for consideration by the union’s worker leadership who will attend our Bargaining Conference and for further constitutional structural endorsement at our March 2011 National Executive Committee meeting


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