XHANTI PAYI: Rethinking labour
Back in 2011, the unions’ main concern was the threat of imports from Walmart. Such a myopic focus meant they missed the real shift in retail
We are still in denial about the rapid changes in the way we live, and the dramatic effects they are having on the future of work.
Those who are unconvinced need only look at retailer Massmart’s announcement this week that it may slash 1,440 jobs, as it shuts 34 stores in a bid to address underperformance.
Indeed, we are unprepared because we have either been distracted or looking the wrong way.
Cast your mind back to the protests in 2011 against Walmart buying a stake in Massmart. Mostly, the concern was that Walmart would destroy local industry by buying cheaper goods outside the country. Thus, an international firm was understood to mean imports and therefore the destruction of local manufacturing and industry.
In 2011, Cosatu argued: "It is possible for Walmart, given its massive size, [to] force its suppliers to lower prices in its quest to be seen as benefiting consumers through lower prices, with disastrous consequences [for] jobs in the companies supplying Walmart."
So, as one of the conditions for greenlighting the takeover, Walmart agreed to set up a supplier development fund to "respond to the threat of loss of employment and sales by local suppliers as a result of potential displacement by way of imports".
The fund seemed to address Cosatu’s concerns. In 2016, research conducted by the Competition Commission concluded that it "has facilitated the entry and expansion of [small enterprises] in the agriculture and manufacturing sectors. It has also positively contributed to job creation and local procurement."
The study also concluded that "the fund has contributed to the achievement of both competition and industrial policy objectives, as contained in the public interest provisions of the Competition Act".
Nobody foresaw the impact struggling consumers and a weak economy would have on SA retail
But what nobody foresaw was the disastrous impact struggling consumers and a weak economy would have on SA retail.
The stores affected by this week’s announcement by Massmart trade in electronics mostly targeted at poorer consumers. But to understand what it means, we need to recognise the difficulty stores selling electronics face in a rapidly changing retail space.
In a study conducted by World Wide Worx, it emerged that SA online sales or e-commerce grew by 25% between 2017 and 2018. Globally, other studies show it’s easier than ever to buy goods online — especially electronics. These are the challenges facing stores such as DionWired.
At the same time, Massmart said that in its past financial year, employee costs rose 8.6% — well ahead of sales, which grew 5.5%.
So in a world where customers are interacting less with people and more online, it’s a no-brainer that we’ll see more of the sort of announcement made by Massmart.
That we have an SA economy battling to keep it together only adds to the stress.
The point is this: we must prepare a better and more sophisticated strategy to deal with the changes in the way the world works. Labour unions can’t continue to sing from the old hymn sheet. And the government can’t afford policymaking geared towards the predictable. We need much more robust interventions.
The Massmart case is a clear example of this challenge. Trade unions and regulators may have done well in 2011 to protect local industry and jobs against imports, but it clearly wasn’t sufficient to ensure a sustainable retail sector.
We need new thinking and, at this point, it would be wise to listen carefully to what companies like Massmart will tell us about what’s actually happening on their shopfloors, and what plans they think they need to address.
• Payi is founder of Nascence Advisory & Research