Union vows to fight mass-layoffs by Massmart in South Africa

The layoffs are being overseen by Mitch Slape who was appointed as the CEO of Massmart in September 2019, reportedly at the behest of Walmart which acquired majority shares in the company in 2011

January 22, 2020 by Peoples Dispatch
Massmart South Africa
(Photo: RAJESH JANTILAL/AFP/Getty Images)

The South African Commercial, Catering and Allied Workers Union (SACCAWU) has vowed to “fight tooth and nail” Massmart’s plan to shut down 34 of its stores, which may result in as many as 1,440 job losses.

One of South Africa’s largest consumer goods distributors, Massmart Holdings Ltd. is planning to shut down its chain of 23 Dion-Wired stores which sell hi-tech electronic appliances. The majority of Massmart’s shares were acquired by U.S-based Walmart in 2011.  

Masscash, one of Massmart’s divisions which owns a number of brands in the wholesale business of food, liquor, groceries and cosmetics, is also planning to shut down 11 of its outlets. 

Though the company has cited “under-performance” as the reason for the closure of its operations in South Africa, but Massmart is nevertheless planning to expand its market reach in Kenya and Zambia. The company has about 450 stores in 13 countries of the continent, including in Nigeria, Ghana, Lesotho and Swaziland, and employs around 48,500 workers.

SACCAWU had also fiercely opposed Walmart’s acquisition of Massmart on the grounds that its global supply chain could damage local businesses and eventually lead to job losses. Unemployment in South Africa at the time was already on the rise, and had reached 25% when the acquisition was completed with a R16.5 (USD 1.14) billion deal in June 2011. 

Currently, the unemployment rate in the country has reached almost 30%. This has resulted in a sharp decline in demand in the domestic market, which has slowed down the company’s sales growth rate. Massmart’s share-price has been declining over the last five years and has now declined by 65%. 

Typical of most companies, Massmart has responded by deciding to shut down operations and undertaking mass-layoffs, further raising unemployment and contributing to the vicious spiral the South African economy is trapped in. 

The mass layoffs are being overseen by Mitch Slape who was appointed as the CEO of the company in September 2019 at Walmart’s behest. Described as “a US retail veteran and turnaround specialist” by the Africa Report, he “has been tasked with reversing Massmart’s fortunes in the country.”

The mass layoffs have infuriated the company’s employees and their union. The step has nevertheless been well-received by major financial players in the Johannesburg stock market, where Massmart’s share price rose from R51.64 (USD 3.57) to R57.01 (USD 3.94) on January 15.

On January 13, the company had published a note saying, “The Massmart Group has recently conducted a store optimization project that highlighted a number of under-performing stores in its portfolio … Massmart has commenced, a potential store closure consultation process.. with organized labor and other relevant stakeholders. A total of 34 Dion-Wired and Masscash stores and approximately 1,440 employees are potentially affected by this process.”

SACCAWU, which is affiliated to COSATU – an ally of the ruling ANC, however maintains that there has been no real “consultation process”. Khulekani Ngubane, head of the union’s national organizing campaign’s collective bargaining unit, said in a statement the following day that “They have not yet initiated anything. They just ambushed us as of yesterday.” 

 “This… mass retrenchment does not only impoverish people or their families, but it also contributes a lot to the unemployment rate and inequality,” he added. “We wish as a trade union to declare that our existence depends on members and as a trade union we must fight tooth and nail in opposing such massive retrenchments.”