Strike over outsourcing could hurt Shoprite

Image credit: Bloomberg/Waldo Swiegers

Source: BDlive

The facility is the largest distribution centre under one roof on the continent. It serves as the distribution point for about 90% of products delivered to stores in the Gauteng area and beyond.

The General Industries Workers Union is behind the action, which forms part of the #OutsourcingMustFall movement.

A union official, Clarence Debeila, said about 90% of the 1,000 workers at the facility were employed by labour brokers who pay "poverty wages".

"The strike is definitely still on. Almost all the staff have joined us," said Debeila.

"We have sent memorandums to management, asking for better wages, but those have fallen on deaf ears. The workers here won’t stop until they are heard," he said.

Debeila said outsourced Shoprite workers were being paid R23 per hour in a 44-hour week.

Workers were now requesting a minimum wage of R10,000.

"We have been camped outside their gate. They have been unable to bring any other labour into the facility because we are here, " said Mr Debeila.

Shoprite declined to comment.

Equity analyst at Avior Capital Markets Kyle Rollinson said the strike could affect the share price if it lasted into the weekend. "The Centurion distribution centre is probably the biggest in the country. If the strike goes on longer than two or three days, it will definitely have an impact. They will be unable to service their stores, which would mean fewer sales. It’s a time issue in the end," said Rollinson.

Shoprite’s share price fell 2.82% on Wednesday to R168.12 in line with declines in other retailers’ shares.

This is not the first time Africa’s largest retailer has come under fire. In 2013, Cosatu urged management to scrap labour brokers.

According to Cosatu, 35% of Shoprite’s staff are considered full-time with a further 5% being termed 40-hour fulltimers or flexi-timers. The remaining 60% are casuals. The union said the minimum wage was R4,000 for fulltime workers and R1,800 for variable-time workers who are mostly under labour brokers.

Pick n Pay spokeswoman Tamra Veley said outsourced workers constituted a tiny percentage of the company’s workforce.