REASONS TO BE PROUD?
African retail unions’ alliance concludes a
Global Framework Agreement with Shoprite
Checkers in the continuing fight for decent
work
By Saliem Patel and Michelle Taal, LRS, South Africa
Published in February 2011
By Friedrich-Ebert-Stiftung
Trade Union Competence Centre
34 Bompass Road, Dunkeld West, P.O. Box 412664
Craighall 2024, Johannesburg, South Africa
Phone: + 27 11 341 0270, Fax: +27 11 3410271
e-mail Gerd.Botterweck@fes-southafrica.org
www.fes-southafrica.org.
In collaboration with Labour Research Service
7 Community House
41 Salt River
Salt River 7925
Cape Town, South Africa
Phone: +27 21 4471677
Fax: +27 21 447 9244
E-mail: lrs@Irs.org.za
http:/www.Irs.org.za
And UNI Global Union
Avenue Reverdil 8-10
1260 Nyon , Switzerland
Phone: +41223652143
Fax: +41223652121
Email: jakob.thiemann@uniglobalunion.org and
keith.jacobs@uniglobalunion.org
www.uniglobalunion.org
All rights reserved: The material in this publication may
not be reproduced, stored or transmitted without
the prior permission of the publisher.
The views expressed in this publication are not necessarily the ones of
the Friedrich-Ebert-Stiftung or of the organization for which the author
works.
Contents
Foreword by Gerd Botterweck .....................................................................................................................................2
Geographic Spread of Shoprite 2009 ....................................................................................................................... 2
The Shoprite Shop Steward Alliance ........................................................................................................................ 4
The Global Framework Agreement ........................................................................................................................... 4
Shoprite Company Analysis ..........................................................................................................................................5
Spread .................................................................................................................................................................................. 5
Structure ..............................................................................................................................................................................6
Strategy ................................................................................................................................................................................6
Financials .............................................................................................................................................................................7
Directors ...............................................................................................................................................................................8
Employment .......................................................................................................................................................................9
Challenges for the Shoprite Alliance ........................................................................................................................12
Ownership and control .................................................................................................................................................12
Management style ......................................................................................................................................................... 12
Financial .............................................................................................................................................................................12
Expansion ..........................................................................................................................................................................12
The Wage Gap and Wage Differentials ....................................................................................................................13
Nature and conditions of employment ..................................................................................................................13
The Way Forward ............................................................................................................................................................13
This report title draws on the name of the Shoprite 2008 Annual Report ‚ ”Reasons to be proud” but poses it as a
question. In the eyes if management and shareholders expansion and profitability are sufficient reasons to be
proud, for unions and workers however labour practices, management style and social responsibility need much
improvement. Retail unions in Africa can be proud of forming The Shoprite Union Alliance and pushing the
company to sign a Global Framework Agreement. The Alliance will continue to build solidarity between workers of
Shoprite Checkers everywhere it operates to improve wages and conditions, make management more responsive
to social responsibility and monitor company operations to build equitable regional economic integration. UNI will
lead and support this Alliance to achieve its goal of decent work and a decent life for all.
The Labour Research Service conducted research with the Shoprite Alliance. This report critically examines
Shoprite, identifying challenges for unions in the Alliance to pursue with the company.
Friederich Ebert Stiftung (FES) has supported the Alliance financially as well as practically assisting with the
collection of information in various African countries where they have offices.
Objectives of the Shoprite Shop Steward Alliance:
To engage in dialogue with Shoprite on a regional level to improve the conditions of
workers
To develop campaigns for improving conditions of employment, wages and working
conditions at Shoprite
To serve as a resource/information network for the unions involved.
To enable building solidarity between unions in the region.
1
Foreword
‘Reasons to be proud?’ is the second publication published by the Friedrich- Ebert- Stiftung (FES) Trade
Union Competence Centre, in collaboration with the Union Network international (UNI) and the
Labour Research Service (LRS)in Cape Town with regard to the South African Retail Giant Shoprite. The
publication emerges out of research conducted by LRS to support the work of UNI and its affiliated
retail unions from all over Africa, in their endeavour to regulate the labour policy of Shoprite and its
operations all over the continent. In their efforts to influence the labour and social practices of
Shoprite, UNI and its affiliated retail unions have established a continental union network to
co-ordinate their activities and enhance their voice as representatives of Shoprite employees.
‘Reasons to be proud’ is the title derived from the Shoprite 2008 Annual Report, in which the company
celebrates its successes in terms of growth and profitability. Shoprite recorded increases in sales and
profits even during the height of the recent devastating global economic crisis. In 2009 the company’s
sales increased by 25% while its profits increased by 23%. According to research the company’s
financial achievements have been attributed to its problematic procurement and labour strategy:
Shoprite is known for sourcing its goods from outside the host countries and for pursuing an employment strategy based on increasing use of various forms of flexible low-wage non-permanent labour.
Of further concern to the unions, is the seeming injustice in how the company’s achievements are
distributed. The research unveiled that the company’s executives and shareholders score handsomely
in huge salaries, bonuses and dividends, while workers receive a raw deal in terms of wages and
working conditions.
It is in this context that the Friedrich-Ebert- Stiftung supports efforts by unions to pursue objectives of
sound corporate practices and decent work at Shoprite. To this end FES supported efforts by UNI to
achieve a negotiated Global Framework Agreement (GFA) between UNI and Shoprite which was
signed last year between the parties to pursue responsible and sustainable corporate behaviour and
starting a social dialogue for the betterment of the employees and the company. We trust that this
publication will be of value in pursuing these objectives, and that our overall co-operation with UNI
and the union network at Shoprite will achieve improvements in the terms and conditions of employment for Shoprite workers all over Africa so that they too can have reasons to be proud!
Foreword by Gerd Botterweck
2
Geographic Spread of Shoprite 2009
India
Nigeria
Ghana
Uganda
Tanzania
Angola
Malawi
Zambia
Zimbabwe
Nambia
Botswana
Madagascar
Mauritius
Mozambique
Swaziland
South Africa
Lesotho
Source: Shoprite website
3
Unions In The Shoprite Shop Steward Alliance
Country
Union
Botswana
Botswanan Wholesale, Furniture And Retail Worker Union
Ghana
Union Of Industry, Commerce And Finance Workers
UNICOFW
Lesotho
National Union Of Retail And Allied Workers
NURAW
Madagascar
Confederation Generale Des Syndicates Des Travailleurs De Madagascar
FISEMA
BWFRWU
(Workers General Trade Union Federation Of Madagascar)
Malawi
Commercial Industrial And Allied Workers Union
Mauritius
Clerical, Administrative, Financial, Technical Employees Union
CAFTEU
Mozambique
Sindacato Nacional Dos Empregados De Commercio, Seguros E Services
SINECOSSE
Namibia
Namibian Food And Allied Workers Union
NAFAU
Nigeria
National Union Of Shop And Distributive Employees
NUSDE
South Africa
South Africa Commercial, Catering And Allied Workers Union
SACCAWU
Swaziland
Swaziland Commercial And Allied Workers Union
SCAWU
Tanzania
Tanzanian Union Of Industrial And Commercial Workers
TUICO
Uganda
Uganda Hotel, Food And Allied Workers Union
UHFTAWU
CIAWU
(National Commercial, Insurance And Service Workers’ Union)
Zambia
National Union Of Commercial And Industrial Workers
NUCIWU
Zimbabwe
Commercial Workers Union Of Zimbabwe
CWUZ
currently in merger negotiations with other affiliates of BFTU
The first meeting of the Shoprite Union Alliance took place in Port Elizabeth, South Africa, in 2003
where 9 African countries were represented, at the initiative of South African based Shoprite shop
stewards’ council and SACCAWU. The Alliance met 4 times since this inaugural meeting and
currently comprises 15 of the 16 African countries where Shoprite has operations. The Alliance
involves shop stewards, making it an African alliance of unions rooted on the shop floor. To ensure
that the Alliance is strong, countries are in the process of forming shop steward councils at a
national level. South Africa, Zambia and Tanzania have already established such National Shop
Steward Councils with other countries to follow suit.
The Global Agreement
A major achievement of the Alliance has been the signing of a Global Agreement (GA) between
Shoprite Checkers and UNI. After three years of stalling and reluctance on the part of the company
to the inclusion of ILO conventions, the GA was signed on 23rd February 2010 in Cape Town.
The agreement adheres to the ILO’s declaration on the Fundamental Principles and Rights at Work,
namely –
Freedom of association and the effective recognition of the right to collective bargaining;
The elimination of forced labour;
The prohibition of child labour;
The elimination of discrimination in respect of employment and occupation.
4
Shoprite Company Analysis
The GA was a milestone; however, an analysis of the company reveals further challenges. The
Alliance will monitor and engage the company on a range of issues identified through this
analysis.
Spread
Shoprite is a South African based company which is the largest food retailer in Africa, operating in
16 countries across the continent. Shoprite operates under various brand names and its
geographic spread is revealed in the table below. Currently it has 1,146 operations in South Africa
and 206 in the rest of Africa. The number of Shoprite stores increased from 366 in 2007 to 383 in
2009. Over the same period Checkers stores increased from 115 to 134, Usave from 99 to 154 and
OK Furniture from 170 to 204. This expansion occurred mainly in South Africa and Namibia. Two
new Shoprite stores were opened in Swaziland and one in Mozambique while one store closed in
both Tanzania and Madagascar.
Shoprite Geographic Spread Of Operations
Shoprite
South Africa
Angola
Botswana
Ghana
India
Lesotho
Madagascar
Malawi
Mauritius
Mozambique
Namibia
Nigeria
310
3
5
1
1
4
7
2
1
5
13
1
Swaziland
Tanzania
Uganda
Zambia
Zimbabwe
6
4
2
17
1
Total
383
Checkers
130
Checkers
Hyper
Usave
24
129
5
Ok
Ok
Furniture Express
180
13
House
& Home
Hungry
Lion
Ok
Franchise
44
103
1
7
213
2
1
4
44
1
4
6
6
1
3
4
1
3
4
11
2
10
2
2
2
7
134
24
154
204
14
46
125
268
5
Structure
Shoprite Holdings Ltd is a public company listed on the JSE Limited, with secondary listings on both
the Namibian and Zambian Stock Exchanges. It is therefore ‚owned by approximately 5, 000
shareholders. Actual control of the company though rests centrally in the hands of the CEO and the
Chairman, James (Whitey) Basson and Christo Wiese. The non-executive chairman, Christo Wiese,
effectively holds 44 percent of the voting shares at Shoprite and has the power to block any moves he
does not favour.
The management structure of Shoprite is highly centralised with all company decisions being made at
the Head Office in Cape Town, South Africa. Unions from other African countries have raised that
negotiations with the company are consistently delayed as issues are referred back to the Head Office
in South Africa. Financial control is also centralised with all revenues and supplies directed by the Head
Office.
Strategy
Shoprite is focusing on further rapid expansion. While this has happened in South Africa, the company
aims to reach a goal of 50 percent of total revenue coming from abroad. In 2008 Africa outside of South
Africa accounted for 12.3 percent of revenue, up from 11 percent in 2007. In 2009 it is reported at 13.6
percent of total revenue.
Shoprite’s growth focus is particularly in the oil-driven west coast including Nigeria, where it has one
store, Democratic Republic of Congo, where construction of two stores is underway, and Angola.
This drive for rapid growth is impeded both by a lack of infrastructure, and licensing issues. In
Swaziland newly hired workers who had been stocking shelves were sent home days before
store-opening as Shoprite had not obtained a proper licence of the store. As of the time reported they
had been without pay for three months and unsure of their future. Delays and closures may be frustrating to Shoprite’s head office; it is far more serious for the workers who are without work and pay.
As it seeks to grow operations quickly in the regions it will also close operations quickly where stores
have proved unprofitable leaving workers unemployed as is the case in Tanzania. After closing Slipway
store in Dar es Salaam in April 2009, the retailer shut the one at Mayfair Shopping Centre, where it had
32 employees, in October 2009 because it was making losses. This was the fourth outlet in
Tanzania to be closed since it started operations in the country in December 2001.
6
Financials
Shoprite continues to prosper. Both sales and profit maintain an upward trend despite global
economic misery. In 2009 sales increased 24.5 percent to nearly R60 billion. Profits likewise
increased by 23 percent to R3 billion. The success of Shoprite in Africa has been attributed by
some analysts to its sourcing of a high proportion of goods from outside the host country
very quickly applying a highly centralised form of sourcing and distribution where goods are
stored and distributed from one central point in South Africa.
Figure 1: Rising Sales at Shoprite
R59,318,600,000
R60, 000, 000, 000
R50, 000, 000, 000
R47,651,500,000
R40, 000, 000, 000
R30, 000, 000, 000
R33,511,300,000
R38,949,800,00
R29, 704, 200, 000
R20, 000, 000, 000
R10, 000, 000, 000
R2005
2006
2007
2008
2009
Source: Shoprite annual reports 2005 - 2009
Figure 2: Rising Profits at Shoprite
R3,018,100,000
R3,000,000,000
R2,461,300,000
R1,434,600,000
R2, 000, 000, 000
R1,708,100,000
R1,002,900,000
R1, 000, 000, 000
R2005
2006
2007
2008
2009
Source: Shoprite annual reports 2005 - 2009
The cheaper imports and economies of scale give Shoprite its competitive edge over other
bigger and smaller retailers in Africa.
Recent research in Zambia shows that about 65 percent of Zambian store products
originated in South Africa, with some perishable items coming from Zimbabwe. This raised
concerns among local Zambian producers who lost their consumers as their goods were
regarded as inferior. The standards and efficiency requirements that Shoprite puts on its
producers for quality and standardization has barred the entry of many small-scale local
suppliers despite the company’s stated policy of nurturing local producers.
7
Directors
The 2009 annual report reveals that the executive directors earned on average nearly R7
million in 2009, a rise of 28 percent on the previous year. This is 5 percent more than the
increase in profits over the same period. But what the average executive earned is small
compared to what the CEO, James (Whitey) Basson, took home in 2009. His salary of R 19.3
million was a 47 percent increase on his 2008 figure, with benefits this figure rises to R24
million. His increase was double the percentage increase of profits for that year.
Figure 3: Average executive pay at Shoprite
R6,863,000
R6,000,000
R5,635,000
R4,795,000
R4,000,000
R2,000,000
R2007
2008
2009
Source: Shoprite annual reports 2007 - 2009
Figure 4: CEO pay at Shoprite
R24,128,000
R20,000,000
R16,640,000
R12,638,000
R10,000,000
R0
2007
2008
2009
Source: Shoprite annual reports 2007 - 2009
8
When asked about it, the chairman of the board said that the CEO received this salary because
he was worth it. It raises the question as to what value Shoprite attributes to its workers. According to the agreement between Shoprite and SACCAWU the minimum wage in South Africa was
R22,800 per year in 2007 and it would therefore take 554 years for the average worker to earn
what the CEO earned in that year. The CEO’s remuneration in 2009 was R24, 128 ,000, double
that of 2007, while the minimum wage increased by less than 10 percent to R24, 000. A worker
in South Africa had to work 1, 005 years to earn what the CEO earned in 2009.
The 2007 study, ‘The Sting in the Tail’, revealed that wages were even lower in other countries.
The annual minimum wage in 2007 was an equivalent of R3,168 in Madagascar which means
that an average Shoprite worker in Madagascar would have to work nearly 4,000 years to earn
what the CEO earned in that year.
On top of his annual pay the CEO also cashes in share options valued at R276 Million just before
Christmas 2009 and still holds around 10.7 Million shares worth R702 Million
Employment
The 2009 Annual Report states that ‚At the end of the reporting period the Group provided
permanent employment to 83 866 people in the 17 countries where it does business. An
additional 10 493 people were employed in a time when thousands of people were made
redundant. Of the total number of people employed, 61 050 are black, 15 861 coloured, 2 950
Indian and 4 005 white. Women represented 65.4% of staff. The number of casual and other
labour employed is not noted in the report. The February trading update states that the total
employee figure is now 89 000.
Unionisation is extremely difficult at Shoprite, however, unions in most countries have made
great strides as unions have indicated in the table below.
9
Country
Union
Number Of Workers
Number Of Shoprite Workers
Percentage Of Shoprite
at Shoprite
belonging to Union
Workers belonging to Union
Men
Women
Total
Men
Women
Total
Men
Women
Ghana
UNICOF
118
85
203
55
83
110
47
98
54%
Madagascar
FI SE MA
227
178
405
32
39
71
14.1
21.9
17.5%
Malawi
CIAWU
113
177
290
50
60
110
44
34
38&
Mauritius
CAFTEU
128
177
305
128
177
305
100
100
100%
Namibia
NAFAU
Nigeria
NUDSE
96
80
70
80
72.9
100
85.2%
South Africa
SACCAWU
Tanzania
TUICO
170
182
352
117
120
237
69
66
67%
Uganda
UHFTAWU
138
119
257
60
44
104
43.5
37
40.4%
Zambia
NUCIW
Zimbabwe
CWUZ
11
10
11
10
100
100
176
150
36%
24 173
67 383
48.6%
1000
2058
21
100%
505
505
21
Total
100%
As reported by national unions there is still a low level of union organisation of casual workers with
only South Africa, Mauritius and Ghana reporting union organisation of casual or non-full-time
workers. The total number of workers in Madagascar has risen as has the number of union members
and union density has increased by over 10 percent since the previous survey, while both union
numbers and percentage membership has dropped by nearly 20 percent in South Africa with 49
percent (2007 – 75 percent) of full time workers organised and 30 percent (2007 – 42 percent) of
part-time workers in the union as at February 2010. It has been highlighted that unions continue to be
weakly organized in Namibia, Botswana and Swaziland; Alliance members must assist these countries
with their organizing efforts.
Industrial Relations
Since the last report two years ago trade unions have taken up issues of wages, conditions of employment, racism and the casualisation of labour with Shoprite. Some of this has led to industrial action as
has been reported in Malawi, Zambia and Namibia.
Malawi: In October of 2009 workers at the operation in Blantyre went on strike demanding better
working conditions and protesting against racist remarks made by management against local workers.
The store also refused to employ casual workers on a full-time basis after they had worked there for
many years. It was prepared to ‘upgrade’ them to part-time employees.
The Malawi Shoprite Workers Union demanded that ‘white’ managers change their attitude towards
local employees and stop calling them ‘kafirs’, ‘monkeys’ and other racist names. The government
intervened to resolve the dispute calling on management to change its attitude to
workers.
10
In December 2009, workers at Lilongwe’s main Shoprite store went on strike demanding 50 percent
annual increment from management due to increasing commodity, educational and rental prices. The
company reached a settlement of 15 percent; however, subsequently worker leaders were fired for
‘staging an illegal strike’. Workers were reinstated after government intervention.
Zambia: In July 2009 Shoprite workers in Zambia went on strike demanding higher wages and a
pension scheme. Negotiations on the pension scheme had dragged on for four years. Government
intervened asking the company to reach a settlement with workers; however, workers came out on
strike in August after the company refused to make acceptable offers. After a meeting between the
Minister of labour and the Shoprite CEO, a Memorandum of Understanding based on workers’ demands
was agreed to between management and the NUCIW.
Namibia: In February 2010 a consumer boycott of Shoprite was called for by the National Union of
Namibian Workers (NUNW) to which NAFAU is affiliated to highlight the continued rise in the
in-formalisation and casualisation of labour especially by companies of foreign origin such as Shoprite.
Shoprite denies that it uses casual labour in Namibia, insisting that all its employees are on contracts. The
union however remains unsatisfied with precarious employment at Shoprite.
Tanzania: In the 2008 negotiations TUICO achieved a 51 percent increase for workers when allowances
such as meals, transport and house rentals are included. TUICO achieved this after mobilising workers
and showing management the huge wage disparities between workers in Tanzania and workers in
South Africa using the research produced for the Shoprite Alliance.
11
Challenges for the Shoprite Alliance
Ownership and control
With the bulk of shares in the hands of the Chairman and the CEO, their interests dominate and become
the interests of the company as a whole. While other shareholders have to actively protect themselves
within the little space provided in company law, as was the case when the executive mooted a private
equity buy-out,
unions have no space to challenge these dominant interests other than relying on their organised
power. As with the case of the signing of the GFA, it is only through solidarity and organising that the
union will win space for dialogue, access to information and a voice for workers interests.
Management style
The management of Shoprite is highly centralised with store and country managers having to report to
and obtain consent from Head Office which impedes the company’s responsiveness to workers’ issues
at a local and national level. Unions have raised that management needs to be more responsive to
workers’ and local issues. This should be done through creating consultative processes at branch and
national level as well as the appointment of managers that understand local dynamics, respect workers
and are prepared to engage with the union as a partner. To date the company has shown little enthusiasm for embracing consultation and dialogue and it will require huge efforts on the part of trade unions
to bring about this change.
Financial
Shoprite repatriates all profits from regional operations back to South Africa which entrenches unequal
regional integration in Africa. Given the highly centralised financial strategy of the company, unions will
be at pains to re-orientate the company towards contributing to equitable regional integration of the
continent.
Expansion
The company’s expansion strategy is driven purely by short-term profit-making. This will lead to
sporadic opening and closing of stores with little regard for workers employed at these stores or
communities in which these stores operate. Unions will not find it easy to introduce corporate social
responsibility in a company whose triple bottom line is ‘profit, executive bonuses and shareholder
dividends’.
12
The Wage Gap and Wage Differentials
Shoprite pays low wages using national minimum wages as a benchmark wherever it goes. This has led
to unequal wages being paid to workers in different countries who do the same work. The wage gap
between workers and directors continues to grow annually. The unions will be hard-pressed to undo
this long-practiced unfair distribution of reward within a company that values the rich and powerful.
Nature and conditions of employment
While employment at Shoprite increased by eleven thousand in the 2009 financial year, unions in the
Alliance expressed concern that most workers are employed on a part, ‚key or flexi-time basis with a
massive replacement of permanent employees with labour brokers. This has been a long-term strategy
of Shoprite to ensure reduced labour costs. Trade unions will have an uphill battle to get the company
to introduce full-time employment, pension schemes, reduced hours of work and other benefits.
The Way Forward
The Shoprite Shop Steward Alliance is committed to grab the bull by the horns. At the Alliance meeting
in April 2010 the following organising and bargaining strategies were discussed and adopted.
Recruitment at new stores: Unions will monitor the opening of stores in new regions and deploy
organisers to recruit new employees to increase union representation and defend the rights of new
employees.
Recruitment across all forms of employment: Unions will recruit workers in all forms of employment
and across grades and job functions to combat the divide and rule tactics of Shoprite.
Trade union unity: In countries where more than one union organises at Shoprite, UNI will assist to
build unity and lay the basis for one union in Shoprite.
13
National Shop Steward Councils: Unions will ensure the formation of national shop steward councils
to provide a democratic structure through which workers can struggle for their rights.
Collective bargaining: Trade unions will intensify collective bargaining in all countries and share their
experiences with each other.
Communication: UNI will develop communication systems and tools to raise awareness among
Shoprite workers and the broader public about the struggle of the Alliance for decent work and decent
life.
The next milestone for the Alliance is the successful outcome of the first discussion forum between UNI
and Shoprite management. While UNI will table proposals coming from national unions to management, it is sure to encounter resistance and inflexibility. The Alliance will
mobilise from branch to national to regional in preparation for this meeting.
14