Workers’ Rights in Global Commerce

Few industries have experienced such a change as commerce has during the last few years. Through mergers and takeovers, enormous regional and global retailers and wholesalers have emerged. Although small and medium enterprises still employ a majority of the commercial workers, they are hard pressed by their overwhelmingly powerful competitors.

Specialized non-food retailers like Ikea, Toys"R"Us, H & M and Blockbuster have built up their global presence much faster than the food retailers and hypermarket chains. Lately, most attention has, however, been focused on these food and general traders. Many of them are also making important inroads in the non-food business.

Wal-Mart is an important catalyst for the structural change in world commerce. During the last year or two, western Europe has become a main focal point for the mergers and take-overs. It will not take long before many parts of Asia and Latin America will experience a similar situation.

Western Europe itself has seen its own commerce sector become increasingly dominated by multinational retailers and wholesalers as the common market has emerged. Having used up their growth potential at home, particularly German, French, Dutch and British multinationals have expanded abroad.

In Europe, attractive new markets have been found in the south and east. In southern Europe, retail and wholesale trade has always been dominated by small and medium enterprises, but this is now changing. In the newly emerging market economies of Central Europe, the multinationals found much potential for growth.

Ahold and Carrefour were among the first to be investing heavily outside Europe, the Dutch company in the United States and the French in Latin America and Asia. They are now followed by the other major players, who are casting their eyes on the huge markets in countries such as Brazil, China and Russia.

For these commerce giants, large size gives many major competitive advantages. When competition increases, they look for further strength through continued growth. There is always somebody looking for a take-over object and mergers can therefore be a way also to protect an existing company.

Much of what is said about Wal-Mart and its influence on employment and collective agreement provisions could equally well be raised in connection with other leading multinationals. What makes Wal-Mart special, however, is its overwhelming size and its brutality as an anti-union employer and predatory competitor. Commerce trade unions and their members should be clear about the fact that the expansion of Wal-Mart is a real danger for what has been achieved in the way of economic and social well being for the people working in this industry.

Wal-Mart entered the European market late 1997, when it bough Wertkauf, a private company with 21 large supermarkets. One year later, 74 Interspar markets were added and the German Wal-Mart was created. The hopes that labour relations would develop positively soon disappeared as staff began to feel the effects of Wal-Mart’s poor business performance. In 1999, more that 200 million USD were lost and the Arkansas-based multinational seemed to loose its touch also as an employer in Germany. The human resource management procedures, which Wal-Mart tried to import from its American operations, were not very well received. In July 2000, workers in German superstores went on a two-day strike to force the company to sign their collective agreement.

Short of gaining a critical mass in the competitive German retail market, which it would need to turn around its poor result, Wal-Mart made a failed attempt to take over Metro in July this year. The attraction was the chain of Real hypermarkets, which have not been doing so well in Metro but which the German wholesale and retail giant is said to need to bring leverage to its cash and carry sector’s dealings with food producers. Wal-Mart has made it clear that it will continue its expansion in Europe, saying that it will add some fifty more hypermarkets in Germany only.

The United Kingdom was the second European country where Wal-Mart established itself. This was through Asda, a chain of some 100 hypermarkets, which was snatched from the British retail giant Kingfisher just when a deal was about to be made. In the United Kingdom, Wal-Mart has been operating under the Asda banner and with much of the old Asda concept intact until the first Wal-Mart Superstore was opened in Bristol in July 2000. By the end of August, 86 Wal-Mart Asda stores were to trade 24 hours a day. This is hardly the kind of development which Europe’s commercial workers are interested in.

Although its market shares are lower than those of many German and British competitors such as Metro, Aldi and Tesco, Wal-Mart has not been late in taking them on through constantly escalating price wars. Already now, the price wars are costing jobs both in commerce and industry. In Germany, both enterprise associations and trade unions predict that the job losses this year will run in the thousands. There is also an increasing pressure on collective agreement provisions. In the United Kingdom, unionised employers have stepped up their efforts to find savings in personnel costs as the Wal-Mart price war takes its toll.

The Wal-Mart ignited price wars in the United Kingdom and Germany can have many negative long term effects on the whole commerce sector. Some of the commerce enterprises who have to participate in this competition themselves warn that if all emphasis is on price, the quality of both products and services will suffer. Lower wages and less attractive employment conditions will affect the labour force. Already now, Wal-Mart has been said to have difficulties in finding qualified staff to ensure that its German distribution centres would be up to standards.

German authorities have found it difficult to enforce the ban against predatory pricing as Wal-Mart ruthlessly uses its global weight to carry on this predatory fight, pulling other major competitors along. Particularly the small and medium sized retailers find it hard to respond, as do some of the larger chains as well.

Questions should be asked whether the company starts to be so excessively dominant on the global level that measures should be taken to ensure free competition. When comes the point where Wal-Mart should be split to secure free competition in global commerce? Uni Commerce will need to follow the German and British developments closely and act when possible in support of necessary interventions in defence of employment and collective agreement conditions.

The European retail and wholesale competitors continue to position themselves, many through mergers and take-overs. The last years have seen giant corporate deals such as those between Carrefour and Promodes, Metro and Makro, and Ahold, Hakon-gruppen and ICA. In mid 2000, Ahold announced that it is preparing a new major take-over later in the year. The chief executive of Ahold has also stated that he believes there will be only three major global players in the future, Wal-Mart, Carrefour and of course Ahold itself.

Also if major short-term job losses can be avoided in the merging companies, such as in Carrefour, there can be many negative employment effects resulting from longer term rationalisation. The overall effects on commerce employment of these developments will be negative if total consumption does not increase at the same pace as productivity. Uni Commerce and its affiliates must closely monitor and try to influence the follow up to mergers, take-overs and other structural changes, protecting the jobs as efficiently as possible. A key role can be played by European Works Councils and, hopefully, in the future, by global works councils.

Retail and wholesale trade is not affected only by structural changes and the expansion of multinationals. The introduction and implementation of new technologies is an equally big challenge for commercial workers and their trade unions world-wide. Among the important issues to approach are e-commerce, both business to business and business to consumer, self scanning, logistics systems, multimedia and other in-store sales support applications. Many of these have been encountered first in the multinationals and they are already in many ways deeply affecting labour relations. In the future, the new technologies and the new ways of doing business will in one or another way permeate the whole commerce sector.

E-commerce is already big business. It continues to grow exponentially and many believe it to reach a retail market share of between 5 and 10 per cent in only a few years. All major retailers have created their own e-commerce operations and are actively developing their concepts. While many upstart Internet traders have seen their fortunes wane, the major retailers are relying on their well-known brand names to help them on the way. They benefit from their distribution and logistics networks and from their know-how as traders. Altogether, the traditional retailers and wholesalers are well placed to take lion’s share also of the new commerce.

To expand e-retailing also to food and other goods which are not suited for the present systems, companies need to have covering distribution networks. In August 2000, Tesco announced that it had expanded its on-line grocery service to cover the whole of the United Kingdom and that it intended to establish a similar operation in Korea. Tesco is said to be the largest on-line grocer in the world, with 250,000 on-line customers.

It has also been said that Ahold’s recent acquisition of U.S. Foodservice as well as some of its other take-overs in the United States are foreboding a major role for the Dutch company as a consumer-oriented e-commerce retailer in the important American market.

Internet-based e-commerce affects traditional retailing in many ways. It is a competitor which must be taken seriously. Many retailers will therefore try to develop those aspects of their operations, where they have an edge over the e-traders. We can expect increased attention to be given to the total shopping experience, combining consumption with entertainment. Shopping malls and hypermarkets will continue to emerge, with growing pressure on inner cities, suburban shopping centres and rural commerce.

If more attention is to be given to customer services, using multimedia and other in-store service support systems, other labour cost savings will be made. Among the last labour-intensive functions in a supermarket and hypermarket is the cashier’s post. Self scanning technologies now start to be so advanced that at least part of the operators can be expected to introduce them. Metro has already signalled that it will introduce self scanning, probably in their cash and carry wholesale markets. Others can be expected to follow suit, resulting in major job losses unless those who are made redundant are placed in other functions. To cope with such a development in these huge corporations, social plans and massive training programmes are needed.

The pressure is mounting also on shop opening hours as the large companies make reference to the 24 hour trading on the Internet. In sectors where e-commerce already has an important market share - such as in books, music and consumer electronics - efforts by many of the large companies to abolish shop opening regulations are particularly strong.

New ways of doing business within distribution chains already impacts on jobs and employment in wholesale trade and for commercial sales representatives. During the first half of this year, all the major enterprises have grouped themselves in Internet-based purchasing market places. Large investments have been made and the whole sourcing and purchasing function can be expected to change considerably.

Together with TUAC - the trade union advisory council in the OECD - FIET and Euro-FIET Commerce have participated actively in the global process to open up the Internet for a fast expansion of commercial activities. Uni Europa Commerce will continue to monitor and to participate in this OECD-driven process as well as seeking to influence the positions of the European Commission.

Uni Europa Commerce has proposed that the social partners seek common ground to react to the employment and social effects of e-commerce, in joint approaches to international, European and national authorities. Uni-Europa Commerce will raise the technological developments and their effects on employment and jobs as one of the major priorities in the European social dialogue with EuroCommerce.

A major social dialogue project, which was launched in 1999, seeks to define new job profiles in commerce and to develop the necessary vocational education and training approaches. The commerce unions and employers in most European Union member states are actively involved in the work, which will have a major impact on how both new workers and existing employees are trained. This will concretely support the employment of commercial workers.

Electronic commerce will add to the number of people doing telework. In 1999, the European social partners in commerce negotiated two related draft agreements, one on the rights of teleworkers and another on protecting and supporting elderly employees. These agreements are the first to be based on a European Commission communication of late 1998, which challenged all European social partners to take the lead in negotiating frameworks for developing a modern work organisation. The objective is to conclude these framework agreements before the summer 2000.

Organising and trade union development

The growing role of multinational retailers and wholesalers brings new challenges also to the global and regional trade union structures in commerce. Uni Commerce and its regions are changing from research-oriented networks of national trade unions to operational organisations, with concrete tasks.

Without serious organising efforts which lead to real results, commerce trade unions cannot continue efficiently to protect and promote workers’ rights in the new environment. Regional and global integration, including the WTO process to liberalise trade in services, will cut away most of the legal protection, which has given many commerce trade unions a role and position even if they have not succeeded to affiliate large numbers of workers.

The aim of organising is not only to sign up new members. With growing mobility of labour, the turnover of trade union membership will continue to increase if workers are not effectively tied to their organisations. In commerce, a consolidated and efficient trade union structure can be based only on well trained and motivated volunteers, who are competent and committed to represent their colleagues at work-places and in companies. Trade union education and training as well as organisation development are therefore important ingredients for a successful organising approach.

The trade union organising situation in a particular country is of importance and interest also for workers and their trade unions in other countries. Uni Commerce can and must therefore play a world-wide and regional role in supporting organising.

An important task for Uni Commerce is to promote and develop international agreements and other rules which secure commercial workers’ trade unions an indisputable right to organise. The International Labour Organisation’s (ILO) Declaration on Fundamental Principles and Rights at Work of 1998 establishes this formal right on a world-wide basis. To support its implementation in practice, Uni-Europa Commerce concluded last year an agreement on fundamental principles and rights at work with the European commerce employers’ organisation EuroCommerce, within their social dialogue.

The last two years have seen an important development of the core areas of the European social dialogue. This was

On the global arena, the ILO Declaration was followed up at the end of last year at a global tripartite commerce meeting. This meeting confirmed that all the fundamental rights must be applied also in commerce, including the right to establish or join a trade union. As the first sector, the meeting also requested that the International Labour Office establish a small permanent tripartite group for world-wide social dialogue in commerce. This was confirmed by the Governing Body of the ILO at its March 2000 meeting. When the budgetary issues have been solved, the group can be constituted.

The October 1999 meeting also requested that the International Labour Office produce a training material on social dialogue in commerce. This would help to develop constructive labour relations on a world-wide basis and could also serve the commerce trade unions in their organising efforts. Work on this material is expected to start before the end of 2000.

Also a European agreement on fundamental rights and principles at work, signed with EuroCommerce late 1999, confirms the workers’ right to join trade unions and their unions’ right to negotiate collective agreements. This is the first agreement to expressly guarantee the right to organise in trade unions, which has been formally concluded within the European social dialogue.

Discussions about the right to organise and the need for global negotiations between the social partners in commerce have on several occasions been held with political leaders, including the minister of commerce of the United Kingdom and top labour ministry officials in Germany. The German labour ministry has continued its support for this work also during year 2000.

European companies, including Metro, Carrefour and Tesco, have separately assured Uni Commerce that they will fully respect the right of their workers to join trade unions and that they want to continue and develop their dialogue with Uni Commerce and its affiliates. In several individual cases, including Poland, Hungary and Turkey, Uni Commerce has successfully intervened during 1999 to protect trade union rights. Concerning Turkey, a unique formal agreement has been concluded with Metro.

The social dialogue round table meetings in Central and Eastern Europe are important for organising in countries where anti-union sentiments are common among employers. Together with leaders of Uni Europa Commerce affiliates, EuroCommerce representatives and top managers of large multinationals speak out at these meetings, in favour of workers joining trade unions and enterprises joining employers’ associations.

Whatever the rules are, commerce trade unions know that real life can be very much different. Many commercial workers are still afraid of being victimised and losing their jobs if they join a trade union. This is a particularly big challenge for trade unions in countries, where unemployment is high and where regulatory controls are weak.

But there is also sometimes a pressure from unionised companies on trade unions to organise also the non-unionised ones. This has to do with the brutal competition between leading commerce multinationals, which is pressing price margins down. In Germany, which is the most competitive food retail market in Europe, the margins are already razor-thin. In the United Kingdom, this year has seen an unprecedented price war launched by Wal-Mart Asda. In the United States, Wal-Mart is expanding to the food supermarket trade where many leading competitors are organised and covered by collective agreements.

Both large and small enterprises look for cost cutting wherever they can, to be able to respond to their competitors. Every commerce trade union knows that wages and other benefits are where the savings are being made. It is hardly surprising that pressure is once again growing in favour of concession bargaining and de-regulation. Many organised employers send clear signals to trade unions: Either organise the competitors or we will not want to continue our relationship with you.

The rules for when a trade union is recognised by an enterprise are different from one country to another. A common factor is, however, that an effective recognition requires a representative membership base. When the employer is a multinational, also the situation in other countries count. Commerce trade unions in the home countries of leading multinationals, as well as in other countries where they already have a substantial presence in a company, are dependent also on how unions in the new markets succeed in their organising efforts.

In 1999, several meetings were held with the management of leading European multinationals, such as Carrefour, Metro and Tesco, where also global issues were raised. Uni Commerce cannot do the organising, but it can play an important role in supporting these efforts.

The German Uni Commerce affiliates HBV and DAG know that if Poland’s Solidarnosc fails to organise a major part of Metro’s soon 40,000 workers in that country, they will loose some of their influence at home. Therefore they are working with Uni Commerce and Solidarnosc on a joint organising project in Poland. For the same reasons, UK affiliate USDAW is now joining the project on behalf of the Tesco workers.

These are two concrete examples of the new Uni Commerce organising approach to build strong trade unions in the eastern parts of Central Europe. Today, the project involves many of our affiliates, from different parts of the continent. The overall objective is to support a strong trade union movement in commerce in the new EU member states, as an active partner in the European social dialogue and European Works Councils. The experiences can be used in comprehensive campaigns in leading multinationals also on a world-wide level.

In 1999, a discussion on collective bargaining networks in commerce in Euro area - was started. In some regions of Europe, concrete experiences have already been gained. Considering the important differences in collective bargaining structures and traditions, this issue will need to be developed further. Systematic information exchange, collective agreement databases and increased co-operation in European sub-regions are approaches that need to be tested. In many border areas, differences in legal regulations, including shop opening hours and collective bargaining provisions are frequently exploited by employers. This is a subject also for the organising project in multinationals in Central and Eastern Europe.

• To defend and promote a diverse commerce sector which builds its competitiveness through producing quality services with a well trained, qualified and engaged personnel, working under secure and favourable employment conditions and earning a proper living for them and their families.
• To influence the employment and labour relations effects of structural and technological change in European and global commerce.
• To develop the European social dialogue in commerce into a forum where leading employers and trade union representatives seek common ground in protecting and promoting a competitive commerce sector which provides secure quality employment for its workers and to expand this dialogue also on the global level.
• To seek dialogue and co-operation with those employers and companies, which share the general objectives of developing the industry based on high qualifications, respect for workers and trade unions, proper handling of labour relations and social dialogue.
• To raise organising rates in leading commerce multinationals, to develop dialogue and, when appropriate, to engage in social partnership agreements with management.
• To intervene with management on behalf of affiliates in various countries, based on the agreement on fundamental rights and principles at work.
• To establish European Works Councils in those commerce multinationals, where they do not yet exist and where the trade union basis is strong enough to enter into negotiations.
• To develop the aims and contents of the work of European Works Councils in commerce, raising joint concerns particularly in the field of workers’ rights and trade union recognition, while respecting their independence and specific needs.
• To seek to establish the first global works councils or other structures for dialogue.

• A series of Uni Commerce training courses on organising in multinationals, in various countries in Central and Eastern Europe, in co-operation with German, Danish, Austrian, British and U.S. affiliates.
• A Wal-Mart conference, focusing on the global role of this company, its effects on overall developments in commerce, its human resource management approaches and the relationships with producers. The date is to be set.
• An Ahold - ICA meeting, focusing on organising, the establishment of a European Works Council, global co-operation and human resource management approaches in this company group, the date to be set.
• A seminar on organising and developing trade union work in the new private commerce sector, for the Balkan Stability Pact countries, the date to be set.
• Various activities in connection with the Uni Commerce project to organise in leading multinationals in central and eastern European countries.

The enlargement of the European Union to countries in Central and Eastern Europe and in the Mediterranean region, particularly Turkey, is a challenge for Uni Commerce. Together with China, these are the most important new markets for the leading multinational retailers and wholesalers. To retain and strengthen a trade union presence in commerce is essentially important. If union-free zones are allowed to develop, bargaining positions and trade union influence will suffer also in the countries and companies where workers are better organised.

There is also a problem in many parts of Europe, where differences in economic standards, legislation and trade union strength influence conditions across borders. Common policies on regulation, including establishment rules and shop opening hours, must be sought. To prepare for a situation where there will be a genuinely free movement of labour and companies, the commerce trade unions must support each other in the efforts to organise and to bring up the level of wages and employment conditions in the countries where standards are still lower.

These challenges do not concern only the ten countries, which are now lined up for membership in the European Union. It is equally important to approach these tasks in other parts of Europe, where political and economic transition has changed the scene.

Russia is now starting for real to open up for foreign commerce investment. Among the companies which have announced large investment plans are Ikea and Metro, where Uni Commerce affiliates have an established and strong presence. A pilot project to support the organising efforts of the Russian commerce trade union in Metro is being prepared. Uni Commerce is discussing the ground rules with the Metro management and will develop the activities in co-operation with the German commerce unions DAG and HBV.

In Bosnia and Herzegovina, a major project continues to support the development of trade union structures and activities in commerce, contributing also to peace and stability. Projects with similar aims are conducted in the Baltic region together with Nordic affiliates. New projects are being prepared for other countries, particularly in the Balkan Stability Pact region.

Further Uni Commerce action on organising will include the development of training materials as well as initiating consulting and training activities.

• To continue to monitor the enlargement process, keeping affiliates informed about major developments in commerce and influencing the way of incorporating the aquis into legislation.
• The round table process of the European social dialogue, with three meetings to be held in 2000, in Slovakia, Lithuania and Bulgaria.
• The project to organise in major multinationals in Poland, the Czech Republic, Slovakia and Hungary, expanding it to Turkey.

• Courses and seminars, with resource persons from various affiliates, to help affiliates in the countries concerned to develop different aspects of their work.

The global dimension becomes increasingly important for trade union work in commerce. This concerns both the enterprise level and more general political and trade developments.

The decision of the International Labour Organisation’s tripartite meeting for commerce in October 1999 to ask for a permanent forum for social dialogue at the global level has been approved by the ILO Governing Body. Discussions have been held with the International Labour Office about the realisation and financing of such a structure. This will be the first of its kind in any of the sectors.

On the company level, the first approaches have been made to management of some leading multinationals, concerning a dialogue on a global level. These will be followed up.

Some of the priorities in developing the global dimension of Uni Commerce and its work will be:

• The Uni Commerce Steering Group will commence with its work, the first meeting to be held during in September 2000.
• The request of the tripartite ILO meeting for commerce in October 1999 to the ILO Director General to establish a permanent tripartite global forum within the International Labour Organisation, to meet at least once a year to consult about developments in commerce, will be actively followed up.
• Global dialogue with leading multinationals through establishing consultations structures will be actively sought. Among realistic possibilities are Carrefour, Metro, Ahold, Auchan, Tesco and Ikea, without closing out any others.
• Global Uni Commerce meetings will be held on Carrefour, Ahold and Wal-Mart, not excluding other companies.
• Uni Commerce will continue to participate in the OECD-driven process to establish rules for electronic commerce. Policies on e-commerce will be developed.
• The Uni Commerce activities to support an abolishment of child labour will be continued. One major activity will be arranged in 2001, depending on external financing.
• To reflect the need for a stronger global dimension, future reports and other publications will try to address world-wide issues.
• A broad Uni Commerce report on structural and technological change in commerce and its effects on wages, collective agreement benefits, employment and working conditions will be produced and published.
• Various questionnaire and literature studies and background reports on major multinationals will be produced, including information about labour relations issues, to form a basis for the work of Uni Commerce and affiliates
• A publication on the right to organise, based on the conclusions from the ILO meeting on commerce in October 1998 and the agreement with EuroCommerce on fundamental principles and rights at work, will probably be produced together with the International Labour Office.