South African Shoprite workers “extensively protected against dismissal”

SHOPRITE’s decision to fire nearly 3,000 workers in Zambia on Tuesday highlights the investment attractiveness of the rest of Africa over South Africa, thanks to Africa’s favourable economic growth and labour laws, according to Adcorp labour economist Loane Sharp.

Shoprite spokeswoman Sarita van Wyk said on Wednesday the striking workers in Zambia had ignored Shoprite’s second ultimatum to return to work on Tuesday, following Monday’s initial ultimatum.

As such, the company “terminated their employment” late on Tuesday afternoon with an option for the workers to reapply from Wednesday, with no guarantee of being taken back, she said.

Shoprite management in Zambia was meeting Labour and Social Security Minister Fackson Shamenda on Wednesday “and more information about the situation will be available after that”, Ms van Wyk said.

While the striking workers had been urged by the two deputy ministers of labour and social security and the union president to return to work, they had initially “flatly refused”, and when they had agreed to return to work, “by that time the terminations had taken effect”.

Shoprite runs 21 stores in Zambia and nine Hungry Lion fast-food outlets, according to its 2013 annual report. The country has the highest number of Shoprite stores outside South Africa, the report shows.

Zambia ranks 20th out of 148 countries for its hiring and firing practices, according to the World Economic Forum’s latest Global Competitiveness Report. In comparison, South Africa ranks 147th.

Mr Sharp said the rest of Africa was an attractive investment destination for South African companies, “not only because economic growth rates in Africa are higher than at home, but also because labour laws and regulations are much more friendly to businesses”.

South African workers were “extensively protected against dismissal”, and there was no category in the Labour Relations Act for dismissal for poor work performance, he said.

“For this reason, many South African workers are subject to what we call ‘presenteeism’ — in other words being present for work but not productive.” Mr Sharp said Shoprite had “an excellent history of managing labour relations effectively” in South Africa and elsewhere.

“Their latest retrenchments in Zambia should be taken as a sign that Shoprite will not be held hostage to workers’ opportunism. More South African companies should behave in this way,” Mr Sharp said.

He said the two main factors in a country’s attractiveness for investment were economic or revenue growth and the cost of labour, given that labour costs made up a large proportion of production costs.

“Every single African country has a more favourable balance of revenue growth and limited costs than South Africa. I would say that over a 10-year horizon, South Africa will become irrelevant to large companies’ expansion plans.”

Mr Sharp said South Africa was stuck in a low-growth environment “and labour laws are moving in the wrong direction and becoming more and more conservative, not less”.

“Labour costs are rising in South Africa at an extraordinary rate. If you include bonuses and over time, they are growing at about 13% per annum — nearly three times the consumer inflation rate.”

In Shoprite’s financial year to June, the group’s supermarket operations outside South Africa — where it traded from 192 stores in 16 countries — saw a 27.9% rise in turnover.

The group reported a 15.3% turnover rise on a same-store basis, with the major impetus coming from Nigeria, Zambia and Angola.

“We managed to open 19 new supermarkets and we have a further 20 confirmed for 2014,” Shoprite CEO Whitey Basson said in August.

Last month, Shoprite said the closure of five Shoprite stores in Mozambique had stemmed from the dismissal of an employee weeks before.

“The (Shoprite) group believes recent inspections and the current closure of five stores stem from a personnel dismissal some weeks ago after a member of management was caught selling expired margarine through the back door,” the company said in a statement last month.

The Mozambican government’s National Inspectorate of Economic Activities had closed down the stores in Maputo, Boane and Chimoio for selling old food.

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