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The Wal-Martization of the world

UNI’s global response

Report prepared for UNI by Andrew Bibby

www.andrewbibby.com

March 2005

Foreword

  Low wages, poor benefits, insecure jobs – and no unions. That is the foundation upon which the world’s largest retailer, Wal-Mart, has built its competitiveness and expansion.

“Always low prices. Always.” the company says. It does not say that it offers these low prices at the expense of its workers and their families. But the truth is now being revealed, and Wal-Martization is fast becoming a household word for social dumping and union-busting.

In the United States, where most of the company’s 1.5 million “associates” still work, management goes to great lengths to stop them from joining the UNI affiliated commerce trade union UFCW. Union busting teams fly in from headquarters in Bentonville, Arkansas, whenever a suspicion arises that workers want to unionise. When butchers in Texas voted to join the UFCW, Wal-Mart decided to sell only pre-packaged meat in the future, rather than letting the union in.

This report tells the story about Wal-Martization and what it means to the Wal-Mart workers. But it also shows that the company’s own workers are not the only ones at risk. The four month strike by 59,000 UFCW members in Southern California a year ago - to stop Safeway, Kroger and Albertsons from copying Wal-Mart’s concept of low wages and poor health insurance – was proof of just how contagious Wal-Martization can be.

Wal-Mart’s management has announced that growth is now being sought abroad. UNI Commerce has taken up this challenge and is stepping up its global campaigning and cooperation with UFCW, to organise Wal-Mart workers world-wide.

In Germany, Japan, Brazil and in other countries, Wal-Mart workers are organised in trade unions, and they are protected by collective agreements. Through global union cooperation and strong organising efforts, Wal-Mart workers can be given a voice, and the company forced to accept a level playing field in its relations with workers, suppliers and competitors.

UNI Commerce, the global union for commerce workers, is leading the struggle to ensure that commerce workers enjoy decent working conditions and that their rights to organise are respected by Wal-Mart and all retailers.

Philip J. Jennings

UNI General Secretary

An introduction to Wal-Mart

This report is about the business established by Sam Walton.  “Mr Sam”, from a farming background in the US Mid-West, began in business with a franchise store in a small town in Arkansas which he set up in 1945 immediately after the Second World War.  It was successful.  He opened a small chain of similar stores and then began to think bigger.  In 1962, he and his brother opened the first ‘discount city’ store selling low-priced goods, in the town of Rogers, also in Arkansas.  In 1969, Sam Walton’s business was legally incorporated.  Rapid growth continued, focusing primarily on the formula of low-cost stores in smaller cities and towns in the US.  In the late 1980s came the start of the development of ‘Supercenters’, enormous retail ‘big boxes’ in out-of-town locations.  Sam Walton died in 1992.  However, as we shall see,  the business he created continued growing.

The company established by Mr Sam is viciously, viscerally anti-union.   As one confidential internal report produced for store managers some years ago put it bluntly, the company “is opposed to unionization of its associates [employees].  Any suggestion that the Company is neutral on the subject or that it encourages associates to join labor organizations is not true.”

This same document added:  “Staying union free is a full-time commitment… No one in management is immune from carrying his or her ‘own weight’ in the union prevention effort.  The entire management staff should fully comprehend and appreciate exactly what is expected of their individual efforts to meet the union free objective.”[1]

In public, the language used is toned down but the message remains the same.  In a recent letter to the Financial Times, a Wal-Mart spokesperson claimed “As for unions, we are not against them… We simply do not believe that unionisation would add value for the company or our people”[2].

As all trade unions know, intense and active anti-union hostility by management is, regrettably,  not unique to any one company.  But, unfortunately, in this case the company is unique.  The company is Wal-Mart, and Wal-Mart is now the largest company in the world.

Wal-Mart – some facts

Some people may still find it surprising that what started as a local retail business with its headquarters in the small town of Bentonville (population 25,000) in unfashionable Arkansas has overtaken companies such as Exxon, General Electric or General Motors to reach the world’s number one spot.  But the facts speak for themselves.

Wal-Mart now has a total workforce of 1.5 million people, including over a million employees in the USA.  It operates 3,200 US stores and a further 1,100 outlets in nine other countries.  It is a particularly powerful retailer in Canada, UK, and Mexico and also has interests in Germany, Argentina, Brazil, China, Korea and Puerto Rico.  It has significant interests in Japan.

It has assets (2004) of about $105 bn, with an operating profit last year of $9 bn.  Its size is such that it is more than five times bigger than its nearest US retail competitor.  Of every $100 spent by US consumers in all types of shops, $8 is spent in Wal-Mart shops.  Wal-Mart now represents 2% of total US GDP.  As has been pointed out, if it was a nation state this would make it as large as, say, Saudi Arabia.  It would also, alone,  be China’s eighth largest trading partner.

It continues to plan major expansion, both in its home market and internationally.  This year (2005), it is planning to open 230-240 new Supercenters - on average, a massive 175,000 square feet (16,250 square metres) in size - of which approaching a hundred will be in completely new locations.  It also plans about 40 new Discount Stores (these out-of-town stores are roughly half the size of supercenters), and a similar number of quasi-wholesale outlets for consumers known as Sam’s Clubs.   Internationally, the company is expanding both through opening new stores (130-140 planned for 2005) and through take-overs.  This latter approach, for example, is how it became the second largest retailer in the United Kingdom.

Because of its size and influence, Wal-Mart would inevitably demand attention from the international trade union movement.  However, the issue facing us – and the reason for this report - is not just that the world’s largest firm is unpleasantly anti-union is its approach.  It is that Wal-Mart’s way of doing business, and especially its focus on low wages and poor employment conditions, is becoming a de facto norm which other employers are increasingly obliged to follow.  In other words, it is not a question of how to deal with a single company, bad as that company may be,  so much as how to respond to the Wal-Martization of the world’s economic and business models.

Wal-Mart and low pay

Wal-Mart’s chief competitive advantage is the low prices it charges consumers.  One way to keep prices low and remain profitable is to pay its workers less than they would earn elsewhere. 

The wage levels in Wal-Mart were investigated in a University of California/Berkeley report published in August last year.   Using data from 2001 (the last year for which data was readily available), it concluded:

“Wal-Mart’s wages are significantly below retail industry standards… We find that Wal-Mart workers earn on average 31% less than workers in large retail as a whole, with wages of $9.70 per hour compared to the $14.01 average per hour earnings for large retail workers.”[3].

This means among other things, as the AFL-CIO has pointed out,  that a Wal-Mart ‘sales associate’ with a family of three is likely to be well below the official US federal poverty guideline, even though working for the firm full-time[4].

On top of this, Wal-Mart managers have also been accused of regularly making staff work overtime hours without pay.  The PBS TV channel interviewed one former Wal-Mart employee who reported that she was frequently asked to work ‘off the clock’ (an illegal practice under US labour law): “The manager would say, do me a favour, you know, um, just, you know, I’ll try to find somebody to, to work over there and, and then, it would never happen, I would stay there up to four or five hours off the clock and, they would never find anybody to, to take my place”[5].  Wal-Mart paid $50m in 2001 to settle a class action by 69,000 Wal-Mart employees in Colorado for off the clock working.  It is currently facing similar allegations in court actions in several other US states[6].

Most Americans’ health insurance is provided through employer contributions to private insurance, either union negotiated or company sponsored plans.  But non-union Wal-Mart’s private health insurance scheme is considerably less generous than those typically offered in its sector, requiring significant employee contributions.  It has been estimated[7] that (with premiums and ‘deductibles’) a single Wal-Mart shop worker could end up paying about 45% of her or his salary before seeing a single benefit from participating in the scheme.  Wal-Mart’s health insurance scheme is also highly restrictive for part-time workers, defined as anyone working less than thirty-four hours a week. 

Not surprisingly, many Wal-Mart employees do not sign up for health insurance:  the take-up rate is between 41%-44%, compared with the 66% take-up rate at other comparable large employers[8].

Externalising Wal-Mart’s costs on to the community

Wal-Mart can increase its profits because someone else – or, in fact, everybody else - is picking up part of the tab.  It is successfully managing to externalise costs so they are met from public funds.

To an extent, this is a feature of all business.  No company is hermetically sealed from the society in which it operates, even if its annual accounts suggest otherwise.   To operate effectively, businesses require, among other things, educated staff, effective transport infrastructure and low crime environments – all the outcome of publicly-funded services.  

But Wal-Mart manages to increase its level of profitability by externalising more of its costs on to the public purse.  This was the subject of a detailed report early in 2004 by a research team working for US Congressman George Miller.  On the issue of health care, for example, the report points out, “Because they cannot afford the company health plan, many Wal-Mart workers must turn to public assistance for health care or forego their health care needs altogether.  Effectively, Wal-Mart forces taxpayers to subsidize what should be a company-funded health plan[9]”.   According to another study, in California alone taxpayers subsidized $20.5m worth of medical care for Wal-Mart[10].

It is not only health care where Wal-Mart effectively externalises its costs.  The George Miller report came up with the calculation that a single Wal-Mart superstore with 200 employees may result in a cost to federal taxpayers of $420,750 a year, or over $2,000 per employee.  The sums are as follows:

·                $36,000 for free and reduced school lunch

·                $42,000 for housing assistance

·                $125,000 for tax credits for low-income families

·                $100,000 for educational funds available for children in low-income families

·                $108,000 for health care for children in low-income families

·                $9,750 for energy assistance for low-income families

As the report said, “Wal-Mart’s profits are not made only on the backs of its employees - but on the backs of every US taxpayer”.

Wal-Mart clearly knows that some of its employees will require state benefits to supplement their wages.  In July 2003 copies of Wal-Mart employee handouts came to light which explained how staff could apply for Medicaid, food stamps and other public services[11].

There is beginning to be wider understanding of the way Wal-Mart is trying to externalise costs.  In March this year, the Senate of the US state of Maryland considered imposing a special health tax on large employers in the state who spent less than 8% of their payroll on health insurance.  In practice, the only employer in Maryland in this position would be Wal-Mart.

The implications of a new Wal-Mart store on its community are far wider than the issue of low wages, however.  Firstly, it is simplistic to assume that Wal-Mart’s arrival will create new jobs:  the reality is more complex.  Bill Quinn, a Texan journalist who has published a rip-roaring diatribe against Wal-Mart, makes this point: “If a new factory opens in town, it is truly creating jobs that did not exist before;  if a new store comes to town, and that store is selling merchandise that, for the most part, was already available in the town, it is just going to be rearranging the way money already gets spent in the town.  What Wal-Mart offers is not job creation, but job re-allocation and, eventually, job loss.[12]”

The net gain or loss in jobs is difficult to assess, though it has been claimed by UNI affiliate UFCW (United Food and Commercial Workers) that for every two jobs created by Wal-Mart, a further three jobs are lost (small retail businesses are particularly at risk).  The cost of unemployment is of course a further expense which falls on public funds.  So too does the possible environmental cost of creating a large out-of-town shopping complex and the social cost which comes from the economic decline of traditional ‘Main Street’ town centres.  Finally, there may be a cost for the community to bear when Wal-Mart moves on: in recent years, the company has closed many of its traditional discount stores as part of its switch towards the giant supercenters, leaving its former sites at risk of economic decay and urban blight. 

(In passing, it may be noted that, notwithstanding all this, Wal-Mart has been able to attract considerable amounts of grant funding and other forms of US public subsidies designed for economic development and job creation when opening many of its stores and distribution centres.  Individual subsidies in 91 researched cases varied from less than $1m to about $12m.[13])

All together in the Wal-Mart ‘family’ – Wal-Mart’s style of management

In its relationship with employees, Wal-Mart works hard to try to encourage staff to identify with the interests and culture of the company.   Wal-Mart adopts a ‘modern’, informal management style which aims to avoid an overtly managerial us-and-them approach.  Employees are strongly encouraged to consider themselves part of the Wal-Mart team[14]. 

As part of this approach, Wal-Mart chooses to call its employees its ‘associates’ (the Wal-Mart owned Sam’s Club chain of wholesale stores uses the term  ‘partners’).  The day begins in each store with a pep talk from the store manager and this meeting is ended with the participation of all in ‘the Wal-Mart cheer’. 

The philosophy, according to one internal management document, aims to encourage “Company loyalty, pride in excellence, a sense of ownership in the Company, trust, and motivation to do the best job possible”.  Trade unions are seen as antithetical to this approach: “Unions threaten our ability to do these things by creating conflict and by misleading partners with false promises” [15]. 

A company built on the labour of women

Wal-Mart, where women comprise nearly two thirds of the workforce, is now the focus of intense outside scrutiny on how it treats women workers.

Women employees in Wal-Mart are paid less than male employees and are less likely to be promoted.  This is the basis of an important class action lawsuit (Dukes v Wal-Mart) alleging discrimination which is now before the courts.    In June 2004, a federal judge gave permission for this action, started in 2001 on behalf of six women,  to be legally extended to include the more than 1.5 million women who have worked for the company since 1998, making the case the largest civil rights class action in US legal history.

As expert testimony for this case,  Professor Richard Drogin of California State University has undertaken a statistical analysis of gender and pay in Wal-Mart, using data supplied by the company under disclosure requirements.  His report found considerable differences between men’s and women’s earnings at the company:

“Women earn less money than men at Wal-Mart.  This fact is due to women working disproportionately in the lower paying hourly jobs, and earning less money than men holding the same jobs… Not only are women disproportionately working in the lower paid hourly jobs, but they also earn less than men holding the same job, for nearly all jobs, in each year.  Overall, women earned about $5,200 less than men, on the average, in 2001.  Within the hourly workforce, women earned about $1,100 less than men, and about $14,500 less among management employees, in 2001. ”[16]

Another expert witness, Marc Bendick, has investigated the degree of under-representation of women in Wal-Mart’s management posts.  One of his conclusions states:  “The scale, pervasiveness, persistence, and consistency of under-representation of women among Wal-Mart’s managers suggests that such under-representation is deeply rooted in the organization’s corporate culture and the company-wide employment attitudes, policies and practices that reflect and maintain that culture.”[17]

Wal-Mart as a new paradigm

There is already evidence that Wal-Mart’s low-wage approach to employment is beginning to affect workers at other companies, whose own employment conditions are coming under pressure.  For example, southern Californian retail workers in the UFCW were engaged in late 2003 and early 2004 in a lengthy and bitter strike in an attempt to prevent their own unionised companies from responding to the Wal-Mart threat by reducing the terms of their own health insurance policies.  As one journalist wryly put it, this was ‘probably the first time in history that a potential competitor who had not even entered the market yet was such a key player in a labor dispute’[18].

Wal-Mart, unfortunately,  could be more than a role model for its own sector, however - it could be about to take on emblematic status as the prototypical company of the early twenty-first century company.  This, at least, is a thesis which has been advanced by Professor Nelson Lichtenstein of the University of California/Santa Barbara.  He has written:

“In each historical epoch a prototypical enterprise seems to embody a new and innovative set of economic structures and social relationships.  At the end of the nineteenth century the Pennsylvania Railroad declared itself ‘the standard of the world’;  in the mid twentieth century General Motors symbolized sophisticated, bureaucratic management and technologically proficient mass production;  and in recent years Microsoft has seemed the template for a post-industrial knowledge economy.  At the dawn of the twenty-first century Wal-Mart has emerged as just this kind of world-transforming economic institution, setting the pattern for a highly integrated, transnational system of production, distribution, and employment.”[19]

If Prof Lichtenstein’s theory is correct, the implications are far-reaching.  We are facing a move from the GM style of culture, reflected in the post-Second World War consensus which saw benefits to business as well as to employees of adopting the model of relatively high-wage union-recognised workplaces,  towards a model which is much less amendable to any kind of social partnership. 

This is not what we were told would be the nature of working life in the post-industrial IT-enabled ‘knowledge economy’.   Supposedly, human skills would become much more valued in the information age than in the industrial age.  But Wal-Mart does not support this comfortable contention.   Wal-Mart is a very highly IT-enabled company;  its sophisticated IT systems, which enable it to control its empire of stores from the Arkansas head office, are widely held to be ahead of those in use by its competitors.

The comparison can perhaps be made with call centres, which are also highly IT-dependent working environments which have seen the development of a low wage, low status work model, one which unions have also found it frequently difficult to organise. 

Wal-Mart and the international race to the bottom

Wal-Mart brings the same aggressive approach to cost reduction which it uses in relation to employees to its relationship with its suppliers.  There is an expectation not only that the prices it pays for its sales products will be low, but that these prices will year-on-year continue to be brought lower still further.

Trade unions may not traditionally have felt very concerned with the deals which companies make between themselves.  With Wal-Mart, however, such an approach would be a mistake -  this is a key way in which Wal-Martization is exported to other companies, and indeed to other countries of the world.

Wal-Mart’s relationship with suppliers has been the subject of an investigation by journalist Charles Fishman.  According to Fishman, “The Wal-Mart squeeze means vendors have to be as relentless and as microscopic as Wal-Mart is at managing their own costs.  They need, in fact, to turn themselves into shadow versions of Wal-Mart itself.” 

He reports in detail on the deal between Wal-Mart and premier jeans manufacturer Levi Strauss which saw Levi jeans introduced into Wal-Mart stores in 2003, after many years when Levi Strauss had chosen not to deal with the retailer.  As Fishman comments, “Levi didn’t actually have any clothes it could sell at Wal-Mart.  Everything was too expensive.  It had to develop a fresh line for mass retailers…”.

The Wal-Mart deal helped increase Levi Strauss’s sales and profits in the short term, but almost immediately the company also announced the closure of its last two remaining US factories, laying off 2500 workers (21% of the workforce).  Fishman comments, “A company that 22 years ago had 66 clothing plants in the United States – and that was known as one of the most socially responsible corporations on the planet – will, by 2004, not make any clothes at all.  It will just import them”[20].

There are many other examples of companies which formerly manufactured goods in the US but which under pressure from Wal-Mart have now sourced their goods from factories in developing countries.  However, the issue is not one of developed v developing countries.  As the UFCW explains, “Wal-Mart has such a strong command over the retail market that it alone affects the wages of many workers and the fate of many factories around the world… Wal-Mart’s demands dictate lower wages, harder work, and longer hours, while eliminating jobs in factories from Honduras to China.  No longer is this humongous corporation putting only America’s factories out of business, it has now turned to pitting factories in countries around the world against each other in an impossible race to the bottom.”[21] 

It is significant that Wal-Mart makes major use of China as a source for its goods (it moved its purchasing headquarters there in 2001).  It has put continuing pressure on Chinese manufacturers to reduce their prices and costs[22].  At the same time it has also exported its anti-union stance to China,  refusing to accept the presence of unions in its plants – a considerable irony, given that Chinese trade unions are often subject to criticism for being too closely aligned to government to be truly able to represent workers and defend their interests.  The All China Federation of Trade Unions recently singled out Wal-Mart by name as one of a number of western companies which were breaking the law by failing to recognise unions and which, it claimed, were therefore holding back further economic development in the country[23]. 

Wal-Mart’s relationship with suppliers means that it has moved beyond the traditional boundaries of retailing.  As one contributor to a recent online discussion of union tactics towards Wal-Mart wrote:  “Don’t look at Wal-Mart and think of it as the successor to Woolworth or K-Mart [major US retailers]. It is the direct successor to General Motors, General Electric and the older corporations that made the goods… Officially Wal-Mart ‘buys’ its goods from other manufacturers, just like your classic retailer, but Wal-Mart is really just hiring contractors who make the goods to its specification.  Wal-Mart’s relation to its global factories is like how Nike relates to its shoes factories – it doesn’t have to own them since they do what it wants exactly how it tells them to operate”[24

Wal-Mart’s sourcing and purchasing operations and its relations with suppliers is an issue where UNI cooperates closely with the International Textile, Leather and Garment Workers’ Federation (ITGLWF). UNI Commerce and ITGLWF are part of the Advisory Board of Social Accountability International, where UFCW is also present as of May 2005. Both here and in other connections, the objective is to promote social responsibility through the entire supply chain. Increasingly, large multinational retailers make efforts to ensure respect for fundamental workers’ rights and minimum standards as established in the SA8000 social standard by their suppliers and their subcontractors. It is not surprising that Wal-Mart is regularly singled out for disregarding the rights and conditions of the production workers in its quest for price competitiveness.

Fighting back against Wal-Mart

The world’s largest company is not, however, having it all its own way.  In recent years, the UFCW (supported by other unions) has put considerable resources into organising workers at Wal-Mart, using a range of both tried-and-tested techniques (for example, leafleting employees in Wal-Mart carparks) and innovative new ideas (for example, developing websites aimed at Wal-Mart staff).  In 1999, the union won a vote for union representation for a bargaining unit at a store at Jacksonville, Texas, and more recently Wal-Mart stores in Québec province and elsewhere in Canada have moved towards obtaining union representation.

Outside north America, ver.di in Germany has also led industrial action against Wal-Mart.  UNI itself, with the UFCW, has been working to combat Wal-Mart’s anti-union stance in other parts of the company’s empire, including recently in Russia and South Korea.  In passing, it can be mentioned that the UNI Commerce website offers one of the best international resource banks for those seeking independent information about the company.

However, despite these initiatives, the company has shown that it remains determined not to recognise unions – and, regrettably, it has to be acknowledged that so far it has been very successful.  It employs a fast-response anti-union task force which it dispatches to stores in the US where union organisation is identified.  It sabotaged the Jacksonville vote by reorganising internally to make the bargaining unit disappear (and it sacked a key worker there on a trumped-up charge). It has the advantage that the US National Labor Relations Act is very weak.  

In Canada, its response to the desire of workers at its Jonquière store in Québec to be unionised is to move to close the store.  This was clearly intended to scare off other workers from asking for union representation. Votes which were taken in Colorado soon afterwards showed that this had indeed been the company’s intention, and workers were actually too scared to vote for the union. The National Labor Relations Board has taken up a number of UFCW complaints for unfair labour practices.

The same threat has been employed in Germany by Wal-Mart’s managing director there[25], pushing workers to agree to management demands for longer shop opening hours with less staff.

In March 2005, Wal-Mart imposed its ‘ethics code’ on its workers in Germany, without consulting with the works council. The ban on intimate relationships between co-workers and the establishment of an informers hotline where workers are required to report and denounce perceived violations of rules by their colleagues caused an uproar in the German media. The works council, which works closely together with UNI affiliate ver.di, has challenged the code and asked the justice system to stop the company from implementing it.

In some respects, the most effective vehicle for action against the company so far has been the series of class actions (including the major Dukes v Wal-Mart discrimination action mentioned above) which have been brought.  These have already in some cases led to substantial payouts for former Wal-Mart staff, and Dukes v Wal-Mart if successful could be particularly damaging financially for the company.  There are disadvantages in relying on the courts, however.  One is the length of time and the complexity of legal actions, and the fact that they take place at a rarefied level, effectively disempowering individual workers trying to defend their rights at local level.  They do not necessarily contribute to the work of developing and strengthening a union.

Wal-Mart has also been hindered in attempts to open new stores by community action at grass-roots level in several parts of the US. The working-class community of Inglewood, California, recently threw out plans for a Wal-Mart store in its town, and similar campaigns against new Wal-Mart stores are taking place in other areas, including Locals (trade union branches) of the UFCW, which have campaigned vigorously.

Citizens’ groups, religious groups and environmental bodies have come out against Wal-Mart.  The People’s Campaign for Justice at Wal-Mart, launched in 2002, is an initiative designed to help bring the UFCW together with other organisations and individuals also concerned about Wal-Mart and its practices.

Several US states have started to move against Wal-Mart’s denial of affordable health insurance for most of its workers. In one state after another, including in its home state Arkansas, the company is exposed for topping the list of employers whose worker families have to rely on taxpayer-financed Medicaid to ensure that their children get the necessary medical care.

In February 2005, a secret agreement between Wal-Mart and the US Labor Department was unveiled, which led to a public outcry and demands for changes in labour inspection procedures. This came as the company was exposed in Connecticut and other states for having used young workers for dangerous tasks involving chain saws, scrap paper balers and fork lifts. It turned out that a two-week advance warning was always given to Wal-Mart before labour inspectors entered its worksites to find out whether child labour laws were violated, which caused both political leaders and media to denounce it as a sweetheart deal.

Because US unions recognise that Wal-Mart’s downward pressure on wages and working standards in the US extends far beyond retail into manufacturing, services, and even the public sector, we are witnessing an unprecedented campaign to develop a coordinated and comprehensive research, education, and activist approach to combat the negative influence Wal-Mart has on retail workers, production workers, and society in general.  The aim of this campaign, in the words of a UFCW spokesperson, is to “create a movement to confront the reality of Wal-Martization” [26].  Wal-Mart’s international operations are a key component in this.

This broad alliance of opposition against the company is, perhaps, beginning to make a difference.  A recent press report talked of a company ‘increasingly under siege by a growing and diverse legion of critics and class-action litigants’, suggesting that Wal-Mart ‘has stumbled at home and overseas as it encounters for the first time the prospect of limits to growth’[27].  Like other big corporations (McDonalds is another example), there is a sense that its brand is at risk of becoming tarnished.  Wal-Mart’s high profile PR campaign, launched in late 2004, is tacit recognition of this fact[28]. 

Strategies and tactics to combat Wal-Martization

It goes without saying that UNI supports its affiliates across the world who are taking on Wal-Mart on a day-to-day basis.

As stated earlier, however,  UNI’s role must go further than this.   This report has suggested that Wal-Mart’s way of doing business is now influencing other companies who are also increasingly developing the same approach.  In other words, Wal-Mart’s emphasis on low wages (in its own shops and, at one remove, in its suppliers’ companies), together with its rejection of any form of social partnership with trade unions, is creating a broader trend.  

The strategic issue therefore is how to respond globally to Wal-Martization.  The report concludes by offering some comments for further debate.

§          The vital need for an international approach

Wal-Mart and companies like it operate internationally, and a unified international response is required.   As with other aspects of globalisation, there is more need than ever  to ensure that  international trade unionism is strengthened and that UNI is geared up to meet the role which it needs to play.

§          Defending social partnership and the fundamental right to collective organisation

Wal-Mart serves to remind us that not all companies accept the principle of collective representation or social partnership.   

Yes, the right to form and join trade unions is specifically mentioned in the Universal Declaration of Human Rights.  Yes, since 1919 the world has looked to the International Labour Organization to uphold labour standards on the basis of tripartite discussions between employers, unions and governments.  But historic gains like these cannot be taken for granted.  The Wal-Mart case suggests that powerful sectors of business do not (or do not any longer) accept a partnership approach to labour relations.   Neo-liberalism assists them in this by providing an ideological platform for such a position. 

There is a need therefore to defend the instruments of social partnership when they are attacked (and in particular to help maintain the European social model, as the only regional trade bloc which formally recognises social partnership).  Beyond this, there is the need to take the offensive, to explain to a new generation why collective representation and organisation is indeed a fundamental human right. 

§          Continuing to press for labour standards in world trade

The resolutions on trade and labour standards carried at UNI’s last World Congress in Berlin, including the key demand that basic labour standards should be a feature of future WTO trade agreements, are particularly relevant to the struggle against Wal-Martization.  These demands need to be reiterated at the Chicago World Congress.

·                Focusing on organising

However, trade unions will only be able to operate internationally from a position of strength if they continue to be representative of their members and to be effective at the grass-roots level.  This requires continuing focus on organising work. 

UNI has a valuable role to play in coordination of affiliates’ initiatives and in disseminating best practice.  

·                Exploring the most effective forms of organising

Time-honoured organisational tools and language may need to be adapted for new circumstances.  The emphasis on ‘team working’ in companies such as Wal-Mart is likely to require a more subtle approach than a simple ‘unite against the bosses’ rhetoric.  Similarly, gender issues need to be central, not peripheral, to unions’ organising work.

As has already been well-demonstrated in the case of Wal-Mart, the internet offers considerable new scope for organising work.  A number of excellent Wal-Mart-critical websites have been established,  some under the sponsorship of US unions.  The UNI Commerce Wal-Mart website performs a corresponding function at global level.

There may also be scope for more imaginative thinking about ways in which individuals can be ‘in’ a trade union.  There may be various mechanisms possible for strengthening trade union organisations by bringing in those who support the aims and principles but who are not in a position to be formally represented by unions, particularly in countries where union membership is tied to the whole workplace being organised. 

·                Solidarity between north and south

Wal-Martization looks for the cheapest source of goods and labour, wherever in the world that may be.  As with the issue of offshore outsourcing, UNI needs to resist all moves to pit workers in the developed countries against those in the south.  The message has to be made that strong unions in the developed world help workers in the south, and that conversely strong unions in developing countries are needed to help workers in the north.  UNI’s work to encourage new forms of unionism in countries such as India and the Philippines needs to be strengthened.  Campaigns such as that led by the ICFTU against Export Processing Zones are also extremely important.

·                A closer focus on China

As we have seen,  China plays a particularly important role in providing Wal-Mart with many of the goods it sells.  Any effective trade union response to Wal-Martization cannot ignore the issue of China, problematic as this may be. Chinese workers need as effective trade union representation as workers anywhere else in the world.

·                Making wider alliances

Community organisations, citizens’ groups and environmental groups have successfully mobilised against the development of  Wal-Mart stores in many parts of north America, while consumer anti-sweatshop campaigners have also targeted the company’s sale of clothes and footwear produced in sweatshop conditions. 

Organisations like this are vital allies for unions in the more general battle against Wal-Martization.  Anti-sweatshop campaigns (such as that waged relatively successfully against some sports shoe manufacturers) are particularly effective, not least in their appeal to young people;  their value is that they directly point to the link between low prices and poor employment conditions.   The growth of interest by consumers in developed countries in fair trade offers another opportunity. 

There is also a common interest to combat the social dumping of Wal-Mart with those employers – large and small – who base their competitiveness on corporate social responsibility, respect for their workers’ rights, social dialogue and proper employment conditions. In Europe, the Joint Statement on Corporate Social Responsibility between UNI-Europa Commerce and EuroCommerce serves as a cornerstone for the cooperation to defend common basic values.

·                Hitting Wal-Mart where it hurts

Companies such as Wal-Mart can withstand a great deal - criticism, defeat in court actions, poor PR - provided these have no effect on their share price.  They are vulnerable, however,  when the markets begin to move against them.

Investment and fund management companies traditionally operate in a world of their own, unaccountable to the wider society even when, as often,  the funds they are investing are the pension, insurance or savings money of millions of ordinary people, including union members.  Unions should continue to press for greater accountability over the way investment decisions are made.  The recent decision by the Danish trade union federation LO and its affiliated trade unions to disinvest from Wal-Mart is a welcome straw in the wind[29].

Use can be made of the recent public interest in the concept of the ‘triple bottom line’ (social and environmental returns, as well as financial profitability) and in corporate social responsibility.

Conclusion:  Challenging the ‘low wage’ strategy

Sometimes it may seem that there is simply no alternative to Wal-Martization.  But even the world of business can see that there is also a downside.

Tesco has proved that a quality retailer with collective agreements and a socially responsible approach can indeed be successful in competing against Wal-Mart. The US retail giant’s British subsidiary Asda–Wal-Mart has not been able to take market shares from Tesco, which has instead further increased its lead. In Germany, Wal-Mart has not been successful in competition against local retailers, be it hard discounters or hypermarket chains.

In China, Carrefour continues to be in the lead among foreign traders. In Russia, Wal-Mart had to put its investment plans on ice because of difficulties in finding a partner. In Japan, the US multinational was disqualified from the operation to save ailing retail chain Daiei and failed to acquire the Carrefour hypermarkets when the French company disinvested in March 2005.

This report will end with a revealing quote from a feature published in Business Week in April 2004, reporting on the high profits being returned by a Wal-Mart competitor, Costco.  The authors wrote:

“One problem for Wall Street is that Costco pays its workers much better than archrival Wal-Mart Stores Inc does and analysts worry that Costco’s operating expenses could get out of hand… Surprisingly, however, Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures.  BusinessWeek ran through the numbers from each company to compare Costco and Sam’s Club, the Wal-Mart warehouse unit that competes directly with Costco.  We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity… Costco actually keeps its labor costs lower than Wal-Mart’s as a percentage of sales… Put another way, the 102,000 Sam’s employees in the US generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees”[30].