SA warns of job losses in Walmart deal

2011-05-09 11:29

Johannesburg - Walmart's acquisition of South Africa's Massmart Holdings [JSE:MSM] could lead to thousands of job losses and worsening labour conditions, the government will argue at a hearing that starts on Monday.

According to a study commissioned by South Africa's economic development and agricultural departments, about 4 000 jobs could be lost if Massmart shifts 1% of its sales to imports from domestic suppliers.

The report, available on the website of the Competition Tribunal, is one of several statements to be delivered to the tribunal this week as part of a government hearing on Walmart's $2.3bn bid for 51% of the South African retailer.

Walmart's entry into South Africa could also mean worsening working conditions at Massmart, according to the report.

Walmart has said it will honour Massmart's existing contracts with workers.

Competition authorities are the final hurdle for the deal, after shareholders voted overwhelmingly in its favour.

The Competition Tribunal in March delayed the hearings to this week, to allow the government and unions more time to make submissions.

South Africa's trade minister said last week he wanted "concrete commitments" from Walmart not to cut jobs.

South Africa has a history of blocking or imposing conditions on cross-border deals. In 2009 it blocked a $24bn tie-up between MTN and India's Bharti Airtel, citing concern MTN Group [JSE:MTN] could lose its national character.

More recently it allowed Japan's Kansai Paint to take over local paint firm Freeworld Coatings [JSE:FWD], but stipulated Kansai must sell a local unit, build a new plant and preserve jobs to secure the deal.

Walmart, the world's biggest retailer, is aiming to make its largest overseas acquisition since it bought British supermarket chain Asda in 1999.

Some trade unions have threatened to strike against the US company if the acquisition goes through.

  • SoulF - 2011-05-09 12:48

    This is not about jobs, it was never about jobs. Wal-Mart has said they will honour existing employee contracts so that went out the window. Now they are grasping at straws talking about job losses for domestic suppliers. How do they know who Mass Mart will use as suppliers? I think somehow our wonderful Government is going to be losing out on money with this deal, which is the only reason I can see such strong opposition.

  • Nasdaq7 - 2011-05-09 12:55

    Using their crystal ball they can see the future ... the ANC says. I say close down Mc Donalds too - their a global brand too. Coca Cola. Pepsi. They are all imports that destroy our beautiful country. Close down all Kentucky Fried Chickens. Subways. Microsofts. IBMs. And while they are at it, block so that we can support South African companies like And I'm voting ANC forever.

  • Shorts1 - 2011-05-09 14:51

    In fact one must not lose sight of the fact that Walmart's acquisition of Massmart may have the totally opposite effect. Many SA local businesses may well find themselve with enormous opportunities to export some of their products to other Walmart outlets worldwide.

  • james4usa - 2011-05-09 17:23

    Wallmart saves the ave US family $2700 pa. Item I used to buy at Cohens for $46 Wallmart sold for $17.

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