People's Democracy

  No To FDI in Retail! No To Wal-Mart!

Swadesh Dev Roye

THE ceaseless craze of ardent advocates of the Fund-Bank prescribed imperialist globalisation for foreign direct investment (FDI) has constantly been heightening, not less so under the changed political regime in the country. At the same time, while clearly opposing unconditional open access to FDI, the Left political forces have been consistent in their resolute demand that latest developed technology and technical know-how as well as green-field manufacturing ventures ensuring generation of employment must be the pre-conditions with FDI.

FDI IN THE RETAIL SECTOR

While speaking on the occasion of the mid-term appraisal of the tenth five year plan of his government, prime minister Dr Manmohan Singh had announced that his government was considering permitting FDI in retail sector ostensibly to attain the target of employment generation! However, one may better look under a magnifying glass certain facts pertaining to the period prior to his statement and also the subsequent developments.

By now it is widely known that the US retail giant Wal-Mart has been demonstrating an extraordinary eagerness to open a retail chain throughout India. However, prior to its entry into the Indian market, the company has done everything possible to see that the government of India gets inclined to liberalise the retail sector for FDI. The retail MNC has been using all power at its disposal to accomplish their mission. As the Business World says, “The world’s largest company, Wal-Mart, is leaving no stones unturned to lobby for its entry into India.”

Wal-Mart president John B Menzzer visited India in the second week of May this year. To prepare the ground for Menzzer’s visit, according to a media report, David Mulford, US ambassador to India, met the prime minister, finance minister and commerce minister. Thus, even before the Wal-Mart president’s arrival here, the government had publicised its their intent to liberalise the retail sector for FDI.

The purpose and outcome of the visit is clear from a report published by The Financial Times (London). It said: “Prime minister Dr Manmohan Singh said the country would soon allow foreign direct investment in an industry still dominated by small family owned businesses.” The newspaper also quoted the prime minister: “There are many fears, particularly among small traders and small shopkeepers, but I believe we can soon move forward.”  Based on the statement of a bureaucrat, the paper said “the cabinet might lift the foreign direct investment ban before Mr Singh (the prime minister) flies to the US for as meeting with President George W Bush in July.”

In the meantime, the confident Wal-Mart chain has swung into action to rope in an Indian partner. Obviously, it has to be from among the big business houses of the country. Silent competition is sweeping the country. The names of the business houses doing the round, as one gleans from the press, are Anil Ambani, Mahindra group, Godrej etc. Such developments only testify as to how swiftly but silently things are moving.  

WAL-MART’S PROFILE

The Wal-Mart made its debut as a “tiny variety store” in Arkansas, a small town in the southern US in 1962. However, it is rather intriguing to note that within a surprisingly brief period the company has amassed so much fortune that today it is at No. 1 among the Fortune 500 companies in the world. It is the top retail chain in the world and even bigger than the giant MNCs like ExxonMobil, General Motors and General Electric. The sky-high profit lust of the company can be imagined from a report that, in Canada, Wal-Mart “earns three times as much revenue per square foot of store space as Zellers Inc, its nearest competitor.”

The huge multinational retail chain operates in more than a dozen countries and has around 5000 retail outlets throughout the world. Worldwide, more than 138 million customers visit Wal-Mart stores per week. The monstrous monopoly stature of the company within the United States itself has been narrated thus: “It is America’s largest employer with nearly 1.5 million workers… The company accounts for 9 cents of every US retail dollar and sells around 20 per cent of the nation’s groceries and pharmaceuticals. Last year 82 per cent of American households bought at least one item at a Wal-Mart” (Times News Network). The experience with Wal-Mart in Canada is that “since entering the country 11 years ago by buying the failing Woolco chain, Wal-Mart Stores Inc now takes 52 per cent of the retail market share in Canada.”

FEROCIOUS ANTI-TU CHARACTER

“Wal-Mart has built up an expertise, like a labour relations team, whose entire job is to frustrate registration of trade union and employ terror with employees not to join trade union.” The “skill” of blocking the formation of trade unions or busting them has been part of a crude training curriculum for the company’s managers. In the company’s parlance it has been codified as “a manager’s toolbox to remaining union free.”

Thus there is totally prohibition on the formation of a trade union in Wal-Mart stores --- in the land of Yankee imperialists who are the biggest drumbeaters of democracy these days. There exists not a single trade union for about 1.5 million workers in 3,600 stores. This avowed onslaught of Wal-Mart on the trade union movement has been focused in a report published in The Washington Post Foreign Services. It says: “The world’s largest retail chain has fiercely and successfully resisted unionisation attempts at its 3,600 stores in the United States.” The report then adds: “The Food and Commercial Workers is mounting a fresh campaign to organise Wal-Mart workers in the United States, a push, it says, has been given impetus by recent legal action and a former company vice president’s confession that he surreptitiously organised anti-union activities.”

How the government of a country feels forced to succumb to the diktat of powerful foreign multinational companies is demonstrated by Wal-Mart in Canada. At the instance of the company, Canada amended its labour law to deny trade union right to workers. Often referred to in Canada as “the Wal-Mart amendment,” these changes imposed severe restrictions on registration of trade unions and drastically stripped the registrar of trade unions of its authority. It has been written about Wal-Mart’s former vice president Tom Coughlin that “on behalf of Wal-Mart, he used company funds for undercover union busting operations and for paying informers who report on pro-union workers.”

In a letter dated May 19, 2005 and addressed to the premier of Ontario, Toronto, president of the National Union of Public and General Employees (NUPGE) has raised, inter alia, two very shocking questions: (a) “Wal-Mart’s ability to influence the rewriting of Ontario’s labour laws to suit themselves is an affront to all Canadians.” (b) “But what is in question, and what all citizens of Ontario have the right to know, is whether there is a connection between Wal-Mart, the former premier’s office and the change in the Ontario Labour Relations Act to make it easier for Wal-Mart to engage in the wholesale denial of workers rights.”

BUSINESS STRATEGY

Obviously, a “trade union free company” is the cornerstone of Wal-Mart’s business strategy. Such an unethical and inhuman labour exploiting policy has contributed most in pushing it to the position of top retail chain in the world and No.1 among the Fortune 500 companies.

Extreme cost cutting is the tool for grabbing customers in the shortest possible time wherever the chain opens an outlet. “Cut costs (read: wages of labour) to the bone and keep cutting, so you can offer the competitive prices.” Take, for instance, the Canadian experience. There the Wal-Mart paid to its workers 6.20 US dollars per hour against the “union wages of 21 to 35 US dollars an hour found in the paper and aluminium plants.” The consequence: “In an area built on union jobs with higher wage scales, it wasn’t long before some employees tried to organise.” Soon 51 per cent workers of the said retail outlet of Wal-Mart signed the union cards and the authorities declared the legal existence of the union in that store.

But how could Wal-Mart tolerate a trade union! It campaigned that the store is incurring losses and ultimately closed it down, throwing the workers on the street. The media reported: “…the chain sacrificed the store to make a point to its employees across Canada and the United States, where union organisers are involved in dozens of organising drives and court battles.”

The US House of Representatives committee on ‘Education and the Workforces’ published in 2004 a review report on Wal-Mart’s labour practices, and some of its observations are shocking. It said: “Wal-Mart’s record on the right to organise recently achieved international notoriety…Wal-Mart’s labour law violations range from illegally firing workers who attempt to organise a union to unlawful surveillance, threats and intimidation of employees who dare to speak out.”

In its concluding chapter, the report noted: “Wal-Mart’s success has meant downward pressures on wages and benefits, rampant violations of basic workers’ rights and threats to the standard of living in communities across the country. The success of a business need not come at the expense of workers and their families. Such short-sighted profit-making strategies ultimately undermine our economy.”

THE MOOT POINT

The moot point is that FDI in the retail sector shall only harm and not help the economic interests of the country. There cannot be any justification of allowing FDI in retail business in our country. It is a matter of serious concern that Dr Manmohan Singh’s government finds merit in it and gives priority to the entry of Wal-Mart over everything else that concerns the interest of the country and the people. The UPA seems to have forgotten the message of the last general elections --- that rural India needs crash priority attention of the government.

Retail markets in our country are dominated by small businesses whom the entry of Wal-Mart and the like can only bulldoze. The vast number of retail shops run by self-employed small owners shall perish, jeopardising the life and livelihood of crores of people connected with retails business.   

That is why the liberalisation for FDI and entry of Wal-Mart and the like in our retail sector has to be stopped. For, such a suicidal step will not only be the beginning of another imperialist onslaught against our economic sovereignty; our political sovereignty too may come under the evil influence of this notorious US multinational.

The Canadian experience noted above and the ongoing struggle against anti-worker changes in labour laws must be enough for our working class movement to come forward to stop the government from allowing FDI in our retail sector.