Is Walmart in SA a good thing? - July 2011

American retail giant Walmart have officially moved into South Africa with the official approval of its 16.5 billion rand ($2.4 billion) takeover of Johannesburg-based retailer Massmart (which includes Makro, Game and Builders Warehouse).

South Africa’s Competition Tribunal said it had approved with conditions the U.S. retailer’s plan to buy a 51 percent stake in Massmart. The companies must ensure no jobs are cut for two years and that existing labour agreements are honored for three years after the purchase.

New jobs and new stores

Walmart has said it will create 15,000 jobs in South Africa within the next five years, with a proposed strategy that includes opening new stores, and spending 60 billion rand ($8.7 billion) on additional purchases of food and fast-moving consumer goods, mostly from local suppliers.

However, the American retail firm has been criticised by three government departments for their unwillingness to make any binding commitments that would address public interest concerns about the impact of the merger on local procurement, food security and broad-based black economic empowerment (BEE).

Reputation as a "bad employer"

Trade unions in South Africa are also concerned about Walmart's international reputation as a "bad employer". Key issues are future job losses (once the two-year "cooling off"period is over), low wages, draconian workplace rules,anti-unionism and fears that Wal-Mart will use its buying power to boost imports, harming local industries and suppliers.

WalMart is the world’s largest employer with 2.1 million workers. But many cities and even countries do not want the retail presence in their neighborhood, including New York. Accusations of paying below minimum wage, discrimination against female workers and a negative attitude towards unions have frequently been levelled against the multinational.

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