As turmoil in European commerce continues:

The turmoil in European commerce continues, as the most recent rumours point at Metro as the next take-over object for Wal-Mart. An article in a German management magazine sent the Metro shares soaring. On 20 January, they were 14 per cent up at the Frankfurt stock market. The next day, Financial Times reported on merger discussions between British Kingfisher and Metro, which further strengthened the Metro shares, still seriously down from the levels a year ago. Both news stories were denied by Metro, but speculations still continue.

After Wertkauf, Interspar and Asda, the big question is who will be the next one. All seem to agree that Wal-Mart will continue its European expansion and is actively looking around for new companies to buy. France continues to be mentioned as an interesting country. The recent merger between Carrefour and Promodes may have at least postponed any moves. The two French retailers made no secret about their wish to keep Wal-Mart out of the country and that was why they merged. Now, the talk is about Casino, another hypermarket giant.

What makes Wal-Mart so special that even huge multinationals start jumping nervously when they hear that it is coming to town?

It is the sheer size of this retailer that makes it a dangerous competitor. Wal-Mart, with a million workers and an enormous substance value on the stock market, is larger than three or four of its biggest competitors put together. But it is also using this size, which producers can feel in their price negotiations. At home in the United States, many of the goods come from low-wage countries. In fact, Wal-Mart has been frequently mentioned in connection with socially unacceptable production. 

Price wars and a poor labour track record

Both in Germany and in the United Kingdom, Wal-Mart has started to flex its muscles in a bid for growing market shares. A veritable price war is now being fought. With its enormous war chest, Wal-Mart can go on as long as it needs. Finally, however, comes the time when consumers and tax payers have to pay the bill, when losses are taken back and when unemployment benefits soar.

One can ask whether Wal-Mart, with its poor track record from home, will bring anything of value to the commercial workers of Europe. Probably not. Compared with most American competitors, Wal-Mart pays its workers poorly and denies them much of the social protection which UFCW members enjoy in organised workplaces.

When Wal-Mart took over British retailer Asda, FIET Commerce drew the attention of the European Commission to the risks involved in the entry of this enormous retailer into the EU market. Looking at Wal-Mart, one can ask where the line should be drawn when determining whether a company is so powerful that public authorities should intervene to protect competitors and employment. If Wal-Mart is allowed to establish itself more or less freely in Europe, then this line has been clearly crossed.

It has not been easy for trade unions to take a stand on the recent mergers in European commerce. Unions do understand that companies need to move to be able to compete with Wal-Mart. Most of them prefer to deal with European employers, who are prepared to keep up a social dialogue and to comply with collective agreements. In Germany, also Wal-Mart has followed the rules, but one should ask whether this will happen also in other European countries where collective agreements are weaker. And what will Wal-Mart do if and when it becomes strong enough to set its own rules?

Employment is, of course, the key issue for workers and unions. Usually, take-overs cost jobs. Double functions are dismantled and operations merged. The question is whether there will be enough expansion to offset these effects. In the case of Carrefour - Promodes, management insisted that there will be no job losses but that the new Carrefour will set its sight on further growth. The commerce unions in France, Italy, Spain and other countries are now closely monitoring the situation, to see whether this will be valid also in the longer term.

Today, it is the multinationals that set the development trends for the whole of commerce. Trade unions must make sure that they are strong enough to influence these companies. This is possible only when they have a solid enough membership basis to speak on behalf of the workers. Not even the good employers love trade unions and they are prepared to speak with them only if it is useful for them.

In some leading commerce companies, the unions are strong. The German Uni Commerce affiliates are strong in Metro, the British in Tesco, the French in Carrefour and the Scandinavians in Ikea, to mention only some of the leading ones. In many others, unions are all too weak. The situation in new countries is particularly challenging, unless a multinational takes over an existing company with an organised workforce.

Recruiting members is always a priority for a commerce trade union. Many of them need to sign up thousands of members every year just to stay where they are. It is not uncommon with a turnover of more than ten per cent of the total membership every year. To grow calls for really massive organising efforts, but also for active measures to keep the existing members. There are many commerce trade unions which have shown that it can be done. In the fast growing markets of Central and Eastern Europe, Uni Commerce and its affiliates are actively engaged in supporting organising efforts in many leading multinationals.

Most large multinationals in commerce have established European works councils. The most recent ones have started their work late last year, in Metro and Ikea. In Carrefour and Promodes, the works councils are already well established and have now to be merged. Tesco has only recently come into the group of enterprises which have to create a European works council. This is now being prepared in discussions with management, together with USDAW, the Uni Commerce affiliate in the UK.

European works councils can indeed be an important element in the social dialogue, which needs to be built up in the leading multinationals. But they are not enough. There is also a need for a direct dialogue and consultations between trade unions and management. Already now, there are many examples of this kind of a dialogue being good for both sides. This is also a way forward towards a world-wide social dialogue in global commerce companies.

These developments pose many challenges to Uni Commerce. We need to intensify the regional and global co-operation between commerce trade unions and to find new ways to make the workers' voice heard. We will need to come back to these issues very often during the year that has now started.