Update: 18.02.2009

Low prices and low social rights in the retail business

The opening of the first Lidl discount supermarket in Switzerland this March will probably signal the end of inflated prices for Swiss consumers. Swiss supermarkets are slashing prices in anticipation. What hides behind this supermarket price war? In Switzerland, the potential to lower price in retail business is rather limited. The pressure to lower costs will grow on suppliers as well as on local workforce.

The price of local low-cost workforce

In 2005, just before the arrival in Switzerland of Aldi, the other big German discount supermarket chain, a wave of eye-catching reductions had been observed. Indeed, prices have sunken by ten per cent over the last years. In parallel, the social rights of employees in the retail business also dropped sharply. Aldi's strategy is to offer almost exclusively part time jobs wherefore monthly salaries are just about low enough that no contributions to a second pillar pension fund or collective health insurance need to be paid. In addition, employees are forbidden to work another job without Aldi’s written authorisation. The job not only leaves the workforce in a precarious financial situation, but is also legally binding. The arrival of Lidl has put its competitors under great pressure: in July 2008, Migros has raised the working hours of 8000 employees from 41 to 43 hours a week.

Worsening working conditions

In threshold and developing countries, too, the work situation and social rights of employees of suppliers producing for giant retailers are deteriorating. According to the new report by the Clean Clothes Campaign released on 10 February 2009 and supported by the Berne Convention, major global retailers like Carrefour, Tesco, Aldi, Lidl, and Walmart are earning enormous profits and increasing market shares in the garment sector, whereas at the same time workers in their suppliers' factories face increasing poverty, appalling conditions, and serious violations of their basic rights. This model is not sustainable but a direct curtailment of workers’ rights, calling for a change in the system. The present  “It’s time for a better bargain” campaign, supported by several NGOs, was launched as a reaction to these unjust practices in early 2009.

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