Labour expert testifies in Walmart case

2011-05-12 11:17

A US labour expert was cross-examined at the Competition Tribunal hearing in Pretoria today about giant retailer Walmart’s bid to acquire a controlling stake in Massmart.

Kenneth Jacobs, the chair of the University of California Berkeley Center for Labor Research and Education, was appearing as a witness on behalf of the SA Commercial, Catering and Allied Workers’ Union (Saccawu).

His cross examination by Jeremy Gauntlett SC, acting for the merging parties, was expected to continue today.

Jacobs took the stand yesterday.

In his affidavit, Jacobs says he had “written extensively on labor standards policies, low-wage work and the retail industry, including research on Walmart’s labour and employment practices and the impacts of those practices on workers, consumers and the public”.

Jacobs said several academic studies in the US had found Walmart’s expansion into a country led to a small expansion in retail employment.

“New Walmart jobs displaced existing jobs, rather than increased total employment,” he said of the research.

According to his affidavit Walmart workers in the US earn an estimated 12.4% less than retail workers as a whole, and 14.5% less than workers in large retail in general.

“Two studies found that Walmart’s entry into a metropolitan area reduces both average and aggregate retail earnings.

This happens both through the substitution of lower paying Walmart jobs for higher paying retail jobs, and a competitive effect of other retailers reducing wages in order to compete with Walmart.”

According to a statement from Massmart today, Gauntlett’s cross-examination of Jacobs explored the thoroughness of his research and veracity of his sources.
“This identified various inaccuracies and overstatements that resulted in numerous concessions and retractions,” Massmart said.

The cross-examination also explored some conditions proposed by Jacobs that could, in his view, alleviate the concerns of the trade unions about job security, employment conditions, and job creation, according to Massmart.

The Competition Commission has recommended the transaction go through with no conditions.

The Anti-Walmart Coalition – consisting of various trade unions, including Saccawu, the SA Clothing and Textile Workers’ Union, labour federation Cosatu and civil society organisations – opposes the deal because of the negative consequences it sees for Massmart workers, the wholesale and retail sector and its supply chains.

In January, shareholders voted to accept Walmart’s bid to acquire 51 percent of Massmart for R148 a share in a deal worth around R17 billion.
The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.

Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart to get a stake in emerging African markets. 

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