Unions threaten Walmart's South African expansion plans (News Feature)

By Ingeborg Lichtenberg Jan 19, 2011, 12:57 GMT

Johannesburg - US giant Walmart is expanding its operations in Africa by bidding for a controlling stake in South Africa's Massmart, the continent's third-largest retailer with 288 stores in 14 countries.

But South Africa's trade unions are not happy.

Despite Walmart's promise to create jobs and its assurances that it will honour existing labour agreements and rules, the union are threatening to boycott its operations because of its reputation as a company that engages in unfair labour practices.

'We will hold the mother of all boycotts. We can't afford this deal to go through,' said Tyotyo James of Cosatu (Congress of South African Trade Unions), who fears the takeover could lead to the loss of more than 1,000 jobs.

'Walmart is known for its hostile views toward trade unions and its unscrupulous wages,' said Thabo Mahlangu, a spokesman for Saccawu (South African Commercial, Catering and Allied Workers' Union).

Though the official unemployment rate is 25 per cent - a conservative estimate according to many - Mahlangu argues that Walmart should be forced to abide by the country's labour rights.

The world's biggest retailer already has more than 8,800 branches in 15 countries. But above-average growth rates in many African states promise to bring brisk business, particularly with modern supermarkets a scarcity on the continent.

Walmart wanted to buy the entire Massmart before settling for a controlling 51 per cent stake, the bid receiving the overwhelming backing of shareholders.

Also threatening Walmart's plans are South Africa's strict competition regulations, which tend to hinder foreign investors.

Certain important conditions need to be fulfilled before the transaction, worth 17 billion rand (2.5 billion dollars), can be implemented, including approvals from the South African courts and the competition authorities.

'This is not the end,' said Saccawu spokesman Mike Abrahams. 'A legal process has to be followed, which includes investigating the deal. We haven't been heard and the commission has to come back to us on the issues we've raised.'

The unions are hoping to exploit Walmart's international track record to ensure competition authorities attach certain conditions to the proposed merger.

Economist Barney Mthombothi of the Financial Mail magazine has described the unions as 'worker aristocrats' who could not care less about the unemployed.

'It's the pinnacle of insanity to insist on so-called fair labour practices when millions of South Africans are going to bed on an empty stomach because there's no work,' Mthombothi said.

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