Wal-Mart works with unions abroad, but not at home

Correction: Earlier versions of this article about Wal-Mart’s international unions incorrectly described one of the conditions on which South Africa’s government approved the company’s acquisition of a retail conglomerate in that country. Wal-Mart was required to establish a fund for supplier development, not a fund to buy from local suppliers. This version has been updated.


Attendees from South Africa cheer during the Wal-Mart Stores annual shareholder meeting June 3 in Fayetteville, Ark. (Beth Hall/BLOOMBERG)
June 7, 2011

Retailing giant Wal-Mart faced an unusual request when it sought government approval recently to buy a chain of stores in South Africa.

Labor groups there first asked for traditional protections, such as job security and a commitment from the new managers to buy merchandise from local suppliers. Then they called on Wal-Mart to end its long-running battle with unions thousands of miles away in the United States.

“You can’t say you violate the right to freedom of association because the culture in that country supports it,” said Mduduzi Mbongwe, who represents the South Africa Commercial, Catering and Allied Workers Union. “We don’t accept such an argument.”

The exchange highlights the complex relationship Wal-Mart has with its employees as unions become as globalized as the retailing giant’s footprint.

Its employees are not unionized in the United States, where the retailer has become infamous for its staunch opposition to labor groups. Even in Canada, it closed a store after workers there organized. But in the United Kingdom, Wal-Mart touts a growing roster of union employees and has negotiated contracts with entrenched labor groups in Brazil and Argentina for decades.

“We recognize those rights,” said John Peter “J.P.” Suarez , senior vice president of international business development at Wal-Mart. “In that market, that’s what the associates want, and that’s the prevailing practice.”

Union organizers are pushing for a unified approach to the retailer’s 2 million workers around the world. Labor leaders from disparate groups in Central America have begun talks, and unions in the United States, Argentina and Chile bolstered South African organizations during their negotiations. Last week, the international trade union coalition UNI sent a letter to Wal-Mart executives to discuss the possibility of a global agreement similar to those signed by competitors such as France’s Carrefour and retailers Ikea and H&M.

“Our message to Wal-Mart is that they should realize that this is the new reality of dealing with unions in a global economy, that we are so connected,” UNI General Secretary Philip Jennings said.

Wal-Mart has stores in 14 countries, and its expansion overseas is all the more important since it relies on international operations to fuel growth. While sales at home stagnated, its foreign stores raked in $100 billion in sales last year — a quarter of the company’s total revenue. That has forced the retailer to learn to play by a new set of rules.

In some countries, such as China, recognition of unions is required by law. Wal-Mart said about 70 percent of its employees there are members of the All China Federation of Trade Unions. In other cases, the political and social climate of a country makes union membership more palatable. Wal-Mart said that 18 percent of its workers in Mexico have chosen to organize, and British labor leader Paul Kenny said in recent news reports there that its dealings with Wal-Mart have been “honest.”

Chris Tilly, director of the Institute for Research on Labor and Employment at the University of California, said workers in the emerging markets that Wal-Mart is targeting in its international expansion often have a “split consciousness”: They are wary of large foreign enterprises, but the jobs they bring can be a boon to the community.

Tilly compared Mexican workers’ contracts with Wal-Mart to those at other supermarket chains in 2007 and found that Wal-Mart’s pay was comparable or slightly higher. He cited other studies that have shown Wal-Mart paying higher-than-average wages in China and as much as 40 percent more than major competitors in unionized Argentina.

“Certainly they prefer to do without unions, but there are other things that are more core to the model,” Tilly said, such as the retailer’s famously efficient logistics.

In South Africa, government officials approved Wal-Mart’s acquisition of retail conglomerate Massmart on the condition that it honor existing union contracts for three years and vow not to eliminate any jobs for two years. It also required the company to give preference to 500 workers who were recently fired from Massmart and establish a fund for supplier development.

But the government’s decision made no mention of Wal-Mart’s tension with U.S. unions and ignored labor’s request that the retailer drop its opposition to a bill that would make it easier for U.S. workers to organize.

“We have a local philosophy,” Wal-Mart International Chief Executive Doug McMillon recently told reporters. “It’s our intention to demonstrate that we are a great corporate citizen.”

Still, labor organizations pointed to a strike in Chile this spring by 300 Wal-Mart employees to showcase the need for an international alliance.

“We ain’t going anywhere,” said Michael Bride, deputy organizing director for global strategies at the United Food and Commercial Workers International Union, which has been a vocal Wal-Mart critic. ”That’s something that the company’s going to have to grapple with again and again.”

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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