Massmart, a subsidiary of the American retail giant Walmart, is part of a network of thousands of operations around the world. With its headquarters in South Africa, Massmart operates multiple store formats and under several brand news in its four divisions: Massdiscounters, Masswarehouse, Massbuild and Masscash, in 12 countries in Africa.
Walmart bought a 51% stake in Massmart for more than USD 2 billion a decade ago. At current market value, that stake is worth approximately a quarter of that. While Massmart owns some of the strongest retail brands and continues to sell 40% of all large household appliances in South Africa, the acquisition is a ‘massive disappointment’.
In August 2019, Massmart reported its first loss in 20 years. Massmart said that ‘tough trading conditions in SA and other African markets weighed on sales growth and placed pressure on margins, with certain costs rising more than expected.’ With the appointment of Walmart executive Mitchell Slape as CEO in September, it could be a sign that Walmart is going to be more involved in the day to day operations of Massmart. Markets watchers say Slape might replicate the Walmart retail model at Massmart – dramatically slashing costs and selling underperforming assets.
Massmart operates in South Africa, eSwatini, Lesotho, Uganda, Kenya, Tanzania, Zambia, Mozambique, Botswana, Namibia, Nigeria and Ghana. The retailer employs 48,500 people, which is about half that of rivals Pick n Pay, and around a third of Shoprite’s 147,478 employees. Massmart claims that its employment costs, its biggest cost category, ‘were limited to an increase of 2.7% due to a combination of improved staff scheduling in stores and DCs and selective replacement of vacancies.’ There was a noticeable increase in employees from 2011 to 2014, but the number seems to have stagnated, despite the opening of new stores. This statistic supports workers notes that workers are often not replaced after they have either left of their own accord or been dismissed. Our research shows that companies do not report sufficiently on issues such as worker’s wages. It is necessary to obtain information on workers’ pay directly from workers, bargaining processes or through HR Departments. Trade unions play a crucial role as they are uniquely placed to collect such information.
Trade unions organising at Massmart
Retail trade unions in sub-Saharan Africa have created solidarity through the annual Massmart, Pick n Pay and Shoprite alliance meetings hosted by UNI Global Union and Friedrich Ebert Stiftung – Trade Union Competence Center (FES-TUC) for worker leaders in the countries the South African MNCs operate. The Massmart Alliance meeting happened in October and participants represented retail unions in Zambia, South Africa, Kenya, Tanzania, Lesotho and Malawi. The participants, who are usually a mixture of union officials and union leaders, related their experiences relating to Massmart over the last year. Both success stories and challenges were shared towards strengthening cross-border alliances and negotiating for better conditions for all workers and in a rapidly changing workplace. The country reports tabled at the alliance meeting by participating unions spoke to issues such as union membership, collective bargaining, organizing and challenges.
Keys Highlights from Country Reports: How does Massmart treat its employees?
The Tanzanian union represented at this year’s meeting is Tanzania Union of Industrial and Commercial Workers (TUICO). TUICO represents workers from Game in Dar es Salaam. The union density for this store is 76.6%. The store also has seven flexi timers, and they are not part of the union. The minimum wage in Tanzania and which is implemented at the Massmart store is 350 000 Tanzanian shillings, or USD 152.05. TUICO mentioned several problems, specifically the ‘victimisation’ of workers who report misconduct and working overtime without compensation. Intimidation was deemed the biggest challenge, and workers are often forced to ‘multitask’ in the store even when they are unwilling to do so. In 2018, TUICO negotiated a Collective Bargaining Agreement (CBA) for two years, which they view as a victory.
Kenya Union of Commercial, Food and Allied Workers (KUCFAW) represented the workers of Game, Kenya. The union density is 85.50%, and there are currently no part-time workers. The union has four shop stewards working in this division. In June 2018, a CBA was signed with the company ensuring that Massmart workers in Kenya always get paid at least 500 Kenyan shillings above that which is stipulated in the law. The current minimum is 24 500 Kenyan Shillings (or USD 237.13). The workers work 45 hours per week, or 195 hours per month.vKUCFAW raised the issue of medical cover, which was not agreed in the 2018 CBA but waited for 2019, yet there is still no medical cover from Game in Kenya.
In Kenya, Massmart does not pay workers overtime but rather are given off days instead of time worked. The union also pointed out the recurring theme of non-replacement of workers in Massmart stores. Workers who resign aren’t replaced and there a few workers in the shop. KUCFAW said it was easier to get a recognition agreement with Game than it has been with Shoprite. The union reported that the company doesn’t resist its organising efforts. KUCFAW has so far recruited 67 workers in the newest stores in the country and hopes to elect shop stewards soon.
There are two Massmart stores in Malawi. All the 129 workers belong to the union, making union density 100%. In 2018, a CBA was signed setting the minimum wage at 52 500 Malawian Kwacha, which is around 70 USD per month. All workers are permanent and there are no part- timers. One of the biggest challenges mentioned by the union is that when workers are dismissed or resign they aren’t replaced. This often means that workers are forced to work in multiple departments. Also, workers are not given commission on sales, and there are less if any promotions.
The South African Commercial, Catering and Allied Workers Union (SACCAWU) reported that the union density at Jumbo in South Africa is 64%. Recently, some staff were converted from a labour broker to become Jumbo staff. The contracts these staff had were very different, and the union is struggling to get them standardised. An example of this is that employees are forced to work Sundays as normal time as opposed to being paid overtime.
Browns and Weirs (Masscash)
It came to light that Massmart does not acknowledge the ‘Browns and Weirs’ brand name in its annual report. SACCAWU reported that there are currently eight of these stores in the Eastern Cape, with four stores having been converted to Jumbo. The union density in these stores is 81.25%. The two biggest wins mentioned were parental rights and medical aid, but an issue raised about the company introducing Sunday work.
Unfortunately, the union does not have the official numbers on membership in the Massbuild stores. The delegates put this down to a union problem with the consolidation of mandates from regions being an ongoing issue. One issue raised was that the company seems to dismiss workers quite easily, and that workers often aren’t replaced. When workers are replaced, the position is referred to as ‘retail assistant’. This position is more of a general employee.
The union mentioned specifically the relocation of the company’s head office from Durban to Sandton, and the relocation leading to a restructuring. Employees took voluntary severance packages which was costly for the company. One of the issues mentioned is that the company regards off days during the week as leave days. They also employ what they refer to as ‘compressed week workers’ where workers can work up to 12 hours per day. An agreement was made with the help of the CCMA to convert all flexi- timers to permanent workers at a tiered rate.
Massmart operates under three brand names in Lesotho, namely Game, Browns and Cash and Carry. There are 168 Massmart employees in Lesotho, of which 128 (76%) are union members. Many of the other workers are management and supervisors. All of the workers are permanent. Union membership has not decreased over the last year, especially since dismissed workers were replaced. One of the biggest challenges is the position of ‘general assistant’, which is a common challenge for unions in the Massmart Alliance. The lowest-paid workers receive the following minimum wage: Game M3050; Browns M2250; Cash and carry M2230.
In Zambia, Massmart operates Game, Builders Warehouse and Jumbo. Jumbo is yet to be organised. Game has 369 employees while Builders Warehouse has 318. Game currently has 22 shop stewards, of which 20 are men and 2 are women. The minimum wage is 2400 Kwacha per month, across the board. All workers are permanent. Working hours per week are 48 hours, and the union is fighting to have this reduced to 45 hours per week. The union has both an RA (Recognition Agreement) and a CBA (Collective Bargaining Agreement) in place, and these are implemented on the first of July every year. In the previous round of negotiations, the union negotiated an increase of between 6% and 9.5% depending on worker level.
Is Massmart is in a crisis?
The future of the company is unsure and union can only guess at the moves the new CEO might take to save the financial sustainability of the company. We do know from trade union reports that the company is increasingly focusing on employing more flexible workers in the form of ‘retail assistant’ or ‘general assistant’, and this is worthwhile to keep in mind during bargaining going forward. We also know that Massmart might sell off certain parts of its business, and we need to fight to keep jobs for our members.