Asda Wal-Mart: Cutting Costs at any Cost


Wal-Mart is the world’s largest retail company and is more familiar in the UK as the supermarket chain Asda. Wal-Mart has built a global empire of supermarket stores on an image of ‘always low prices’. This obsession with prices has led to poverty wages, ever-worsening sweatshop conditions and the destruction of local businesses and communities. These policies are well known but now new evidence has emerged on how Asda senior management are planning to deliberately “chip away” at workers’ rights and working conditions in the UK.

War on Want has seen a leaked document titled “Warehouse Chip Away Strategy 2005″ that outlines how Asda senior management are planning to drastically undermine labour standards. Asda management plan to breach these rights despite openly acknowledging the risks of trade union opposition and health and safety violations.

Work breaks are to be cut, grievance mechanisms removed and health and safety conditions weakened. The document also proposes removing the right to take individual grievances to external arbitrators. Asda management plans to include “single man loading” despite the fact that their own “risk assessment says 2 men (are) required for loading”. Line managers are advised to “lead by example, not taking all the breaks that hourly paid colleagues get” in order to “take credence away from breaks”.

Of the ten richest people in the world, four are members of the Walton family, heirs to the Wal-Mart fortune. Wal-Mart documents released in April 2005 reveal that the company’s CEO Lee Scott was paid over $17.5 million in total during 2004.

Not content to pay its employees wages that are on average 20% lower than the industry standard, Wal-Mart seeks to cut costs through the routine violation of workers’ rights. Wal-Mart requires that labour costs be kept to less than 8% of each store’s sales. In addition, managers must reduce the labour costs at their stores by 0.2% each year. This drives managers to stretch their workforce to cover chronic staff shortages, and to break the law by employing children and undocumented migrant workers.

One internal audit of 25,000 employees in 128 Wal-Mart stores in the USA found 1,371 violations of child labour laws, including minors working too late, too many hours a day and during school hours. It also found 60,000 instances where workers were forced to work through breaks, and 16,000 where they worked through meal times. Wal-Mart’s model is fast becoming the industry standard, as other firms slash employee wages and benefits in an attempt to compete with the retail giant.

Wal-Mart is vehemently anti-union. Its anti-union policy is a central part of its obsession with minimising costs. Wal-Mart provides managers with its infamous ‘Manager’s Toolbox to Remaining Union Free’ that states: “Staying union free is a full time commitment. Unless union prevention is a goal equal to other goals and objectives in the organization, management will not devote the necessary day in, day out attention and effort.” If there is any evidence of moves towards unionisation, managers are ordered to phone the Wal-Mart Union Hotline immediately.

In the UK too, workers at Asda have come up against Wal-Mart’s anti-union culture. Following Wal-Mart’s 1999 take-over of Asda, the company has sought to restrict the role of general union GMB. After four years of negotiations, a new agreement between Asda and the GMB came into effect in 2004, which does not provide for collective bargaining. In the words of GMB senior manager Harry Donaldson, “We believe that, since the take-over, Wal-Mart has tried to stifle union activity at Asda.” Managers at a unionised Asda distribution depot offered workers a new terms and conditions package which included a 10% pay increase and the requirement that workers give up collective bargaining representation by the GMB. When workers rejected the proposal, Asda withdrew the 10% pay increase.

Wal-Mart’s ability to slash prices at its retail stores is based on its power to drive down wages and working conditions at the factories which produce its products. As the largest retail corporation in the world, Wal-Mart has immense power over suppliers and uses this to dictate everything from prices to precise delivery schedules.

Wal-Mart is leading the race to the bottom by relentlessly squeezing cost efficiencies out of the supply chain. Wal-Mart frequently requires its suppliers to open their books for Wal-Mart inspection and tells them exactly where to cut costs. When national labour or environmental standards create a barrier to cost cutting, suppliers are encouraged to relocate to a labour market that will enable them to produce at the low price Wal-Mart requires.

Even where wages are rock-bottom, Wal-Mart insists that its suppliers drive prices ever lower. Qin, a factory worker in China, explains: “In four years they haven’t increased the salary.” Isabel Reyes, a garment worker in Honduras, tells the same story: “There is always an acceleration… the goals are always increasing, but the pay stays the same.”

In August 2002, Asda sparked a banana retail price war with lasting effects on the banana industry and banana workers worldwide. Asda specifically targeted key items such as milk and bananas as part of its strategy to brand itself as Britain’s low-price supermarket. In the end, consumer prices were lowered by 25%. Asda’s exclusive deal with Del Monte, contracted at what industry experts describe as a “ridiculously low price”, means that it is supplied with bananas grown and harvested under the worst labour and environmental conditions in the world. Independent growers in countries with adequate worker and environmental protection, such as Costa Rica, can no longer sell to Asda and other British supermarkets without making a loss.

War on Want is encouraging Asda employees in the UK to contact GMB if they wish to find out about their rights or start a union. More generally we are calling on the UK government to support a binding framework of corporate accountability to regulate the activities of corporations such as Wal-Mart.

In the global economy huge multinationals are only accountable to their shareholders. If we are concerned about workers’ rights throughout the world, corporations like Wal-mart need to be reined in and unions need to be strengthened.

For more information and to join War on Want’s campaign to rein in global corporations go to: www.waronwant.org/asda or email [email protected]

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