The South African Commercial Catering and Allied Workers Union (Saccawu) on Friday began an indefinite strike at Walmart-owned Massmart, sparking concern this could spill over into the rest of the sector, which is already facing rising costs and a weak economy.
Saccawu spokesperson Sithembele Tshwete said the union was “busy talking” to staff at other retailers who could inflict pressure on Massmart in the “form of a sympathy or secondary strike”, and the union would “announce this one soon”.
Casparus Treurnicht, research analyst and portfolio manager at Gryphon Asset Management, said there “is always the possibility” of this type of industrial action affecting other retailers.
Treurnicht said it is not known how many retail workers are unionised, “but I would say plenty of unionised members are still not striking” and therefore there is a level of uncertainty and “investors need to apply a level of caution”.
Sasfin Wealth senior equity analyst Alec Abraham said “invariably any large-scale industrial action at retail level” could have a knock-on impact and affect general consumer confidence overall.
The strike comes amid Massmart’s turnaround plan, but corporate affairs executive Brian Leroni said this strategy would not be affected by the strike as only a small proportion of the group’s total of 45,000 employees were participating and contract staff had been brought in, meaning there was more than enough capacity.
By late Friday afternoon Massmart estimated fewer than 23% of Saccawu’s members had participated in the strike and said “stores are operating smoothly”.
Leroni said 18,000 staff members are Saccawu members but the company’s national work attendance on Friday was 98% at its Cambridge stores, which are in the process of being sold to Shoprite, and 93% and 91% at its Game and Builders divisions respectively.
However, Tshwete said workers “that are inside the stores are not our members but replacement labour brought in by the company, purportedly from labour brokers”.
“This is one issue that shows that the company is in a good financial position and further indication of its intransigence,” Tshwete said.
Saccawu is striking to demand a 10% wage increase at Massmart’s Builders division; at Game the union wants staff who were retrenched earlier this year to be reinstated in their original jobs; and it wants better car and cellphone allowances for about 170 Makro customer relationship officers.
Massmart said there are “Builders employees who wish to accept the company’s offer of 4% rather than go on strike”.
Regarding the reinstatement of Game employees, Massmart said it had originally identified alternative jobs for the affected Game employees in other parts of the group, but these had not been accepted “under instruction from Saccawu”.
A June Labour Court ruling, which Business Times has seen, criticised Saccawu for dispensing “bad advice” to its members, saying if they had not followed the advice they would still be employed.
However, Saccawu, which is appealing the Labour Court ruling, said its members are under no “obligation to accept offers which are unreasonable”.
Massmart CEO Mitch Slape said the group had “proactively engaged for many months with Saccawu leadership” with the assistance of the Council For Conciliation, Mediation and Arbitration and had “put forward proposals towards finding solutions, only for these to be stonewalled”.
Asked about concerns over the long-term effect on workers’ income, Tshwete said the union and its members were “ready to fight for the improvement of wages and working conditions” at Massmart.
The union's industrial action comes as retailers face serious headwinds, with rising inflation pushing up the cost of doing business and eating into consumers’ disposable income. And a 25 basis point interest rate hike and expectations of further rate hikes next year will put consumers under further pressure.
Black Friday sales and the generally lucrative festive period are still expected to offer a short-term fillip, but the medium- to longer-term outlook is gloomier.
Treurnicht said he is “pessimistic about retail over the medium to longer term” as the country’s middle class is in “financial trouble” and increasing poverty at the lower end means “more riots” like those seen in July “cannot be ruled out”.
Massmart said there are 'Builders employees who wish to accept the company’s offer of 4% rather than go on strike'
His concern is a “downturn in the global business cycle”. He said that if this were to happen SA would be in “big trouble” as “debt levels are too high and our tax base is exhausted”.
Azar Jammine, chief economist and director at Econometrix, said the rise in input costs and the “inability of retailers to pass these on to the consumer the way they would like to” is one of the biggest challenges,
He said SA’s slightly higher consumer inflation of 5% in September, which was released this week, demonstrated this problem, adding that while it has risen, it is “nowhere near as much as many other countries”.
But there are positives, with Jammine pointing to the bounce-back in retail sales for September. He said that ironically, because of Covid-19, a lot of people have been staying at home and saving as they have been reluctant to spend on restaurant and leisure activities, including holidays.
Abraham said there are “multiple headwinds facing the retail sector”, including rising input costs and load-shedding, with recent statistics showing a definite loss of retail sales momentum.
Shares in several retailers closed lower on Friday, with Massmart and Woolworths down the most, closing 3.34% and 3.59% lower respectively at R66.50 and R52.30. Pepkor was 2.78% lower at R23.47 while Shoprite and Pick n Pay were down 1.44% and 1.21% respectively at R196.06 and R55.57.
Meanwhile, at Tiger Brands Snacks and Treats division in Durban, KwaZulu-Natal, employees affiliated to the African Meat Industry and Allied Trade Union have been on a protected strike over wages since November 10.
Tiger Brands said it remained “committed to engaging employees and their recognised representative trade union to find a speedy resolution of the dispute” and also had “contingency plans” in place to ensure normal supply of its products.
