Introduction
In 2011 Walmart's bid to buy a controlling stake in South Africa's Massmart Holdings, Inc. went before the country's Competition Commission and Competition Tribunal, both of which would determine whether to grant the merger outright or to place conditions on it. Massmart Holdings comprises a number of branded subsidiaries in the South African market, including Walmart-style general merchandise dealers, electronics retailers, do-it-yourself building suppliers, and food wholesalers—Game, Dion, Builder's Warehouse, and Makro, respectively—as well as the more recently acquired food retailer, Cambridge Food. South African unions, most prominently the South African Commercial, Catering and Allied Workers Union (Saccawu), with support from the Global Union Federation UNI Global and, in the United States, the United Food and Commercial Workers, fought the merger.
Because of a public interest clause in South African competition law, representatives of the state also intervened, led by the Minister of Economic Development, raising concerns over the potential impact of Walmart's global supply chain on South African manufacturing and agricultural jobs. The departments of Economic Development; Trade and Industry; and Agriculture, Forestries and Fisheries sought to have stricter conditions imposed on the merger, primarily through expanded commitments to sourcing locally and to providing local companies with access to Walmart's global networks. The approval process became protracted, reaching the Appeal Court in 2012. Ultimately the court's judgment bound the merging parties to several conditions, chiefly the establishment of a fund of R200 million (approximately $20 million) to develop and provide training for small- and medium-sized businesses, primarily agricultural producers, to enter the retailer's supply chain.
I examine the early impact of the supplier fund and the argument that retailers can serve a developmental role in emerging economies through supply chain programs in more detail elsewhere.Footnote 1 Here, I focus on reporting the results of a survey of basic labor conditions in six branches of Cambridge Food in Gauteng (the province that includes Johannesburg and Pretoria). Cambridge is the primary food retail subsidiary through which Massmart has planned to expand its share of the food market in South Africa and, eventually, throughout the continent.Footnote 2 A team and I conducted the survey in 2013 as a baseline study to support continued research on working conditions in the stores. These initial findings allowed us to confirm a pattern of low-wage, precarious employment as the norm and will enable us, in the future, to track where and how changes may occur. This baseline is particularly important as new legislation meant to tighten up the use of temporary employment agencies (or “labor brokers”) has recently been promulgated, but it is as yet unclear how employers will respond.
Low-Wage, Precarious Labor
In the branches surveyed, Cambridge Food relied on a workforce typical of retail workers in South Africa.Footnote 3 The majority of the respondents were women, thirty-five years of age or younger, and all were “black.” For nearly one-quarter of the workers interviewed, this was their first job. Of the majority who had worked before, most had held other jobs in the retail sector. Our research also shows, perhaps most importantly, that Cambridge Food used labor brokers extensively to staff its stores. Up to three-quarters of workers in the survey worked for “temporary employment agencies,” which had placed them at Cambridge. These contract workers faced greater precariousness and harsher discipline, including constant threats of dismissal, than those employed directly by the retailer. Contract labor was used throughout the stores, but particularly among cashiers, merchandisers, and packers and in the specialty food departments, like the bakery and meat counters.
Most workers had signed a contract of employment but reported not having a copy of it, despite this being a legislated basic condition of employment. Neither contract workers nor direct employees knew what their contracts contained. Employees of the temporary agencies were more likely not to have a copy of their contract. The terms of employment were marked by low wages and few benefits, as has been the case more broadly in food retailing.Footnote 3 More than three-quarters of the workers interviewed reported that they earned R3,000 (approximately $300) or less per month. The lowest salary reported was R1,300 ($130) per month, and the highest salary was R6,000 ($600) per month. These wages confirm that retail workers remain among the lowest paid in South Africa.Footnote 4 Wages did not vary significantly by age or gender, but direct employees of the retailer earned higher wages than those hired through the labor brokers.
Just over 30 percent of workers interviewed reported being covered by a pension or provident fund, but they received few other benefits. This, too, varied by employer, with three-quarters of direct employees reporting a pension, compared to less than one-quarter of the labor broker employees. In focus group interviews, workers reported either not being paid overtime rates for working overtime hours or not being paid for the total number of hours they worked. Given that the underpayment of wages has been an issue for Walmart in other contexts,Footnote 5 this matter warrants further attention.
The standard workweek in the retail sector, and in South Africa generally, is forty-five hours, but legislation allows the averaging of hours over the course of a month for employees in the wholsale and retail trade. Most workers interviewed worked flexible shifts, averaged over the course of a month; they generally received no additional compensation for working on public holidays and Sundays, or for putting in extra hours. The vast majority of workers reported that their shifts varied weekly. Their average weekly hours ranged from a minimum of sixteen to a maximum of seventy, with forty-eight hours as the mean. Retail trading hours expanded in the 1990s, and it is now common for stores to be open all day on Saturdays, until late afternoon on Sundays and public holidays, and increasingly into the evening hours on weekdays.Footnote 6 Nearly half of the workers reported that they worked before 7 a.m. or after 7 p.m. Most reported working on Sundays. Women were significantly more likely to work on Sundays than men. Labor broker employees were significantly more likely to work on Sundays than either Cambridge staff or employees of its suppliers. Most workers worked on public holidays. Again, however, the labor broker employees were more likely to do so than the Cambridge staff.
The workforce received little training and was given little opportunity for promotion or advancement within the company. Often, workers also were expected to train new staff members without any recognition or reward. In focus groups, workers complained about being overlooked for promotion, the criteria for which made no sense to them. Most direct employees of the retailer were members of a union, either the COSATU affiliated Saccawu or the National Council of Trade Unions (NACTU) affiliate, the Federal Council of Retail and Allied Workers. Only a fifth of labor broker employees were union members.
In short, while direct employees reported marginally better conditions of employment than contract workers, in general there was little reward for or recognition of all workers surveyed. Their jobs are low wage, low skill, and dead end. They are expected to work long hours in flexible shifts that include early mornings and late nights. This is especially challenging, given the context of poor public safety and limited access to public transportation, combined with the fact that these workers are forced to live far from their workplaces as a consequence of the legacy of apartheid-age urban geography.
What this survey documents, in particular, is a case of the extensive use of labor brokering in the retail firm, a development that has followed changes to South African labor law over the past ten to fifteen years, as employers have sought to lower labor costs.Footnote 7 The low unionization is also important to recognize, given that the retail sector was historically dominated by the affiliate of the Congress of South African Trade Unions (COSATU). While other subsidiaries within Massmart have a deeper history of organization by Saccawu, and hence greater union membership, Cambridge Food, as a relatively new firm, has been difficult to organize, in part because of the complexity which labor brokers add to the employment relation.
Working-Class Consumers: Debt and the Working Class as Frontier
Massmart is expected to make a significant investment in expanding its food retailing operations in the immediate future.Footnote 8 While Massmart's late entry into food retailing may hamper the company's ability to obtain sites for expansion, analysts predict its potential future dominance in the South African food market.Footnote 9 Cambridge Food has acted as its conduit for expansion in this market. Cambridge stores are located both in central business districts and formerly segregated black townships, particularly along working-class commuter transit routes. As the company website explains, “[O]ur customers are characterised by high levels of unemployment, reliance on social grants as a primary source of income, and heavy dependence on taxis, trains, and busses to travel between work and home.”Footnote 10 Along with the increasing precariousness of wage labor, many households rely on multiple forms of credit to get by.Footnote 11 Working-class households now borrow to cover basic expenses, to the extent that household consumer debt repayments account for up to 40 percent of monthly expenditures.Footnote 12 In turn, debt fuels retail expansion.
In a national debate that developed in 2011, as the company was trying to sway public opinion toward recognition of its contribution to the national economy, Walmart argued that it would bring cheap consumer products to South Africa's working and middle classes, as well as create jobs,Footnote 13 a major pull in a country where the official rate of unemployment is 25 percent. As we have seen, though, these retail jobs offer little more than a minimal, insecure income. The expansion of retail capital into working-class and low-income consumer markets rides on the back of debt, as the working poor are forced to borrow against future earnings from the low-paying jobs they are now tied to. This creates a kind of “reverse Fordism,” where the cheap food offered by Walmart is necessary precisely because wages are so low.Footnote 14
