COMMENT: Wal-Mart and the state of the union
An outlet in Quebec, Canada has become one of the first Wal-Mart stores in North America to obtain union certification. Famous for its low prices and infamous for its lower wages, Wal-Mart has long opposed such a move. In light of recent negative publicity, however, resisting unionisation could create more woes for the retail giant.
Arkansas-based Wal-Mart faces a new challenge from the United Food and Commercial Workers Union in Quebec, Canada. The UFCW recently gained the right to represent 170 workers at Wal-Mart's Jonquiere outlet, paving the way for the first unionised Wal-Mart in North America. The US$256 bln company, which has long avoided unionisation, may appeal the decision.
Previous attempts to unionise at Wal-Mart have met with resistance. The company has long employed in-store campaigns to deter unionisation attempts among employees. A 1997 unionisation effort in Ontario met with particular controversy. Though employees voted down the measure, the store was later unionised by court order after it was ruled that store managers had intimidated employees. Nevertheless, that union was later disbanded.
The current unionisation attempt comes at a time when the retail chain is expanding its presence in the grocery industry. This has put pressure on rival supermarket chains, which are generally unionised and pay wages of up to US$16.50 an hour. Wal-Mart's wages tend to average between US$8 and US$10 an hour, allowing it to maintain lower labor costs and undercut competitor prices.
This media attention follows a spate of negative exposure for Wal-Mart. The retail giant is currently facing the largest civil rights class-action case in US history. Additionally, a recent report issued by the University of California at Berkeley Labor Center found that in 2001, California taxpayers paid about US$86m in public assistance to Wal-Mart workers who could not afford to live on their earnings.
The stakes are high for Wal-Mart, which employs 1.3m workers in the US alone. Unionisation could potentially create a domino effect, driving up wages and prices, thus creating opportunity for competitors to gain market share. However, fighting unionisation may tarnish Wal-Mart's reputation among consumers. In light of growing competition, the implications of alienating consumers have never been greater.
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