Helsinki (10.06.2004 – Irmeli Palmu) The German retail chain Lidl is moving forward on many fronts and conquering new markets. However, it keeps everything under wraps and infringes the rights of its employees in many countries.
In Finland Lidl is one employer among many. It has joined the employers' federation, engaged in negotiations with the trade union movement, and shop stewards have been elected at its workplaces. Its operations in Finland began in 2002 under the impenetrable shroud of secrecy that has become the company hallmark.
Lidl currently has about 60 retail outlets in Finland, meaning that it has expanded on average by almost one outlet per week after the first outlet opened 18 months ago. Lidl has one distribution centre and another is under construction. It has about 100 warehouse workers and about 900 shop workers. All of the figures for both Finland and other European countries are estimates, because of the secrecy observed by the enterprise. By all accounts, however, Lidl is expanding at a furious pace.
What are the problems?
"Firstly we had clear problems with shift timetables. Partly this was due to incompetence at supervisor level," says Juha Ojala, an official at Service Unions United – PAM.
"When Lidl employees contacted us many of the telephone calls were made anonymously, which was something new and strange in our experience."
Representatives of PAM and Lidl last discussed these problems in February. At this time Lidl promised to rectify the situation. Regular meetings between the Lidl personnel manager and the shop steward were likewise promised. Lidl has shown no outright hostility to the trade union movement in Finland, and has promised to abide by Finnish collective bargaining practices.
"The problems have arisen in individual stores. Central management wisdom does not always trickle down to this level. Lidl’s strict and exceptional rules are also strange in Finnish employment culture. For example, wages and salaries must be kept secret and employer representatives have exceeded their authority in employee inspections, as in cases where employee vehicles have been inspected," Ojala explains.
The requirements governing employee purchases are especially odd in Finland. A separate receipt must be secured for each item and attached to the item concerned. This receipt must then be countersigned by the store manager. If this procedure is not followed, then the employee is accused of theft.
Ojala says that people are still learning to live with Lidl, and that time will tell how this turns out in future. Experiences so far are rather limited.
Strong trade unions in the Nordic countries
Lidl opened its first retail outlet in Sweden in August 2003, and now has 35 outlets and one distribution centre. There are about 750 employees and about ten shop stewards have been elected. Dialogue with the Handels trade union is similar to the experience in Finland, and Lidl is a member of the employers' federation.
"Most employees work about 25 hours per week. They have the same benefits as other commercial employees. Lidl’s market share is less than one per cent. Lidl is in fourth place in the fierce competition between discount retail chains," says John Haataja of the Handels trade union.
The first Lidl stores are expected to open in Norway in August 2004. The distribution centre is due to be ready by July. The Norwegian trade union movement has also prepared itself for Lidl’s arrival.
The situation is similar in Denmark. "The enterprise has already employed a personnel manager and dialogue has begun," says Per Lykke of the Danish commercial workers’ union HK. "Between 25 and 40 stores will be opened in Denmark, but we do not yet know when this will happen."
War on employees
When Lidl is viewed from the perspective of other European countries the image changes dramatically. Lidl has expanded aggressively and continues to do so. Competition for markets is fierce and massive restructuring is going on.
"The discount stores are winning market share from hypermarkets, and traditional stores are continuing to lose out. We do not want to destroy Lidl, as it provides plenty of jobs, and people’s livelihoods depend on this enterprise. However, we want the enterprise to respect human rights and to discharge its social responsibilities," says Jan Furstenborg, a Finn responsible for the European commercial sector at the Swiss-based global union federation UNI.
Besides Finland and Sweden, Lidl currently operates in Germany, Austria, Belgium, the Netherlands, the Czech Republic, France, Ireland, Italy, Spain and the United Kingdom. It will soon begin operating in Hungary, Romania, Croatia, Bulgaria and Slovakia. Entry into of Canada has been delayed slightly. Asia is one of Lidl’s future target areas.
The tactics have been similar throughout. Plans are not disclosed and all preparations take place behind a smoke screen. The pace of growth is immense, but little is known of the background enterprise.
The commando group in Germany
The German trade union ver.di has taken steps to investigate Lidl’s complex organisation. The union has retained a business lawyer as part of this process, but the pattern has not yet become clear.
"The Schwarz group that lies behind Lidl is divided into over 400 enterprises. We have received anonymous letters from accountants, and materials have accumulated. Currently we are trying to identify the enterprises in which the employees work," says Ulrich Dalibor of ver.di.
"Lidl is like a snowball. Its entire operation is based on continuous expansion and growth. We endeavoured to form works councils and get shop stewards elected at its distribution warehouses but the company reorganised itself overnight. Our goal is to identify the core of the enterprise."
Lidl has about 2,500 retail outlets in Germany. A further 450 Kaufland establishments belong to the same group. The number of employees is estimated at 80,000.
"The employees are under heavy pressure. Cashiers are warned if they make fewer than 70 entries per minute. There is no pay for extra work and employees are on call to work at whatever hour of the day. The dismissal threshold is low. Lidl wages war on its employees," Dalibor reports. Ver.di has formed a special unit for Lidl matters.
Belgian unions have positions in Lidl
In Belgium the trade union movement has secured a strong foothold within Lidl.
"Initially it was difficult, but now we have functioning works councils and a shop steward system. The parties negotiate collective agreements," says Frank de Vos of the Belgian trade union LBC-NVK.
Lidl began its Belgian operation by opening eight stores in 1995, and now has 221 outlets. The company has more than 2,000 employees in Belgium, about 65 per cent of whom are organised. The trade unions established their positions within Lidl roughly six years ago. Since then the situation has improved.
"There is still too much work, however. A store manager is often forced to work 50 hours per week," reports store manager Giancarlo Pastorello from Brügge.
"The sickness absentee rate is high," says Veerle Seghers, who has worked at Lidl since the enterprise began operating in Belgium. She has a 28-hour working week, and regards her job as rather good. Assisted by the union, the personnel have eliminated motor vehicle and bag inspections. "Thanks to the efforts of the union, only the police are allowed to search bags."
Difficulties elsewhere
The stories from other European countries resemble the German experience. In France Lidl has grown more rapidly than elsewhere in Europe. Lidl is opposed to union involvement in the enterprise's affairs in France. In Spain Lidl has chosen not to join the employers' federation. In the Netherlands the trade union movement is on speaking terms with Lidl’s local management, but things do not run smoothly at individual workplaces.
"Lidl has no tradition of good management. The middle level management is not trained. There are health problems and a high sickness absentee rate at the distribution centres. Lidl seeks busy and poorly educated employees with no other options," observes Lex Makkinje from the Netherlands.
The Irish trade union movement has gained no foothold within a local Lidl organisations that mainly employs only Chinese students. Lidl first became well known in the Czech Republic for its environmental destruction, when it allowed an old growth forest to be logged in the area where it was due to construct a store building. Although Lidl has not enjoyed commercial success in Austria, its tactics have influenced other employers and enterprises.
Lidl continues to gain ground at any cost. As prices and labour costs are pushed down, its only option is to continuous growth.
*Originally published in PAM, the newspaper of Service Union United. The material for this article came from a seminar on Lidl in Tampere, Finland organised in April of this year by the global union network UNI