Store guide - industrial relations in retail

Shop work is traditionally low paid and low status, with turnover rates averaging 30%. The third of our series on industrial relations in major industries looks at the challenges facing unions trying to organise in the retail sector.

The retail sector is the UK's largest private sector employer, accounting for 2.7 million people or 11% of all UK workers. In the five years to the end of 2003, employment in the sector grew by 140,000. In 2003 alone, UK retail sales topped £235.6 billion.

There are more than 188,000 VAT-registered retail businesses in the UK, but financial clout and employment numbers are increasingly concentrated in the largest supermarkets. The top five retailers account for 85% of the sector's total turnover and the four largest supermarket chains employ a total of 466,000 people, around 17% of the retail workforce.

The density of union membership in the retail sector is far lower than the national averages recorded in the Labour Force Survey from Autumn 2002. The survey shows that union membership across all industries stood at 29%, and at 18% in the private sector. In the wholesale and retail trade sector, union density was 11%.

The numbers game

In common with the call centre and hospitality sectors, the low status, unskilled nature of many retail jobs means there is a highly transient workforce with a fast turnover of staff - turnover in food retailing averages 30% a year. There is also a high proportion of part-timers, including students and working mothers. These groups are traditionally hard for unions to recruit and organise, and this problem is compounded by the scattered nature of the workforce outside the largest supermarket groups.

These difficulties are reflected in turnover statistics for the sector's largest union, the Union of Shop, Distributive and Allied Workers (USDAW), which recruited almost 72,000 new members in 2002, and another 82,000 in 2003, but saw its membership total rise by just 25,000. USDAW estimates that it has to replace around 70,000 members a year just to stand still. Nevertheless, since 1995, its membership has grown by nearly 50,000, an increase of 17%.

At the GMB, research and policy officer Ida Clemo says there is gradual attrition in the union's retail membership. Numbers are falling because of difficulties getting into stores and depots to organise and because of a lack of interest among predominantly young workers. "We've seen an increase in Asda and Wilkinsons, where we have new or renewed agreements, but where they have been in place for some time, the numbers drop," she says. The GMB relies on its local shop stewards to recruit workers in stores and depots.

USDAW's workplace representatives are also responsible for recruitment. But they are supported by 85 full-time area organisers responsible for recruiting and representing employees in small retail sites in defined geographical patches. These organisers, most of whom were previously workplace representatives, advocate workers' interests to local managers and often double as regional safety representatives, giving advice and information and investigating hazards and accidents. The largest retail groups, such as Tesco, have their own full-time officers.

USDAW set up an organising academy in 2003 to support organisers and workplace representatives, putting 15 representatives through training in recruitment techniques then seconding them for six months as full-time recruiters. The union estimates these recruiters signed up 5,000 members and the academy is being run again this year with 18 volunteers.

But the traditional lack of union density in retail and limited rights for bargaining make it hard for the unions to wield any industrial power outside distribution. USDAW general secretary elect John Hannett says that the recent dispute involving 700 distribution workers at a Sainsbury depot on Merseyside, which peaked in four one-day strikes, is a rarity. "We tend to work differently from some unions," he notes. "We are more quiet and like to sort things out through dialogue."

Barely recognisable

Despite the restoration in 2000 of the statutory right to union recognition where a majority of employees vote in favour, unions have made only limited progress in gaining bargaining rights in previously non-unionised firms. This can be attributed to the dispersed nature of the retail workforce.

Of the 878 new recognition agreements monitored by IRS between 1997 and 2004, just 19 were in retail companies (see Due recognition, Getting recognition and A little less recognition).

Nevertheless, USDAW cites recent recognition successes covering 3,000 staff at Poundland, and 10,000 at Alldays convenience shops after they were bought by the Co-operative Group, in whose retail operations USDAW has 36,000 members, the second largest concentration after Tesco.

John Hannett says that the union intends to extend its influence into non-unionised establishments wherever possible. "We are not just looking at in-fill recruiting," he says. "We'll be pushing to secure recognition wherever possible." But he admits that difficulties in gaining access to stores at determinedly non-unionised firms, such as B&Q, Borders, Dixons and Marks & Spencer, means that parleying a clutch of members into a workplace majority or securing talks with management is difficult.

Even when recognition agreements do exist, where they cover distribution workers they are often local arrangements only, while some of USDAW's largest concentrations of retail members - 15,000 in Sainsbury's and 22,000 in Safeway - are covered purely for individual representation.

The unions say they are not sanguine about the status quo. In March, 500 Transport and General Workers' Union (TGWU) members demonstrated outside Sainsbury's head office in London. The company had announced a pay freeze for retail and distribution staff who had not opted to move voluntarily to a new pay structure in 2003 - trading higher premiums for Sunday and public holiday working for a 5% pay increase.

The TGWU used the demonstration to call publicly for Sainsbury's to sign a national recognition agreement in order to avoid such industrial relations problems in future. USDAW met Sainsbury's directors to discuss the same issue, asking them to extend its existing recognition agreement to include pay bargaining.

The unorganised majority

Nine out of 10 retail workers are not union members. The unions' struggle to achieve membership levels above 50% in the big firms where they have full access to employees and where managers are compliant is indicative of the sector's lack of a union culture. Most small shops and chains have neither formal worker representation nor consultation.

A few large store groups, such as Virgin and John Lewis, have partnership arrangements with their workforces that work independently of trade unions, with consultation and participation structures based on local or national committees or management/employee problem-solving groups.

Dr Vidu Badigannavar, lecturer in industrial relations and human resource management at Canterbury Business School, University of Kent, has researched these non-union partnership arrangements in retail and says that they are commonly set up by firms as a bulwark against union organisation.

Badigannavar says that when such organisations are compared with non-unionised retailers without partnership schemes, there is no evidence that the outcomes are any better for employees with nominal participation and consultation rights in terms of pay, benefits, working hours or security from redundancy.

He cites his study of a department store chain with a partnership arrangement dating back 25 years, for which he interviewed the HR director about the benefits the involvement culture had brought employees in past years. "Eventually, he came up with the fact that the staff consultative committee had persuaded the management to provide hot jacket potatoes to staff for their afternoon meal, instead of just sandwiches," Badigannavar recalls.

Equal partners?

USDAW's "softly-softly" approach to industrial relations is combined with a government-friendly attitude that contrasts with the recent swing to the left elsewhere in the union movement.

Outgoing general secretary Bill O'Connor was knighted for services to industrial relations, and John Hannett is on Labour's National Executive Committee. This position has arguably helped the union win some real improvements for members through legislation such as the extension of the minimum wage to school-leavers. But critics argue that it has been at the expense of the union's traditional role in representing members at workplace level.

The main focus of the critical comments is USDAW's enthusiasm for partnership agreements, and particularly its arrangements with Tesco. In 1998, after years of collective bargaining with the firm, USDAW signed a new partnership agreement that removed its right to an annual pay ballot and gave it the right to an increased disclosure of corporate information and joint working at national and regional forums.

The agreement, which was renegotiated in 2003 with improved facilities for representatives and an increase in their numbers from 104 to 800, has helped the union consolidate its position to the point where it now has 110,000 members in Tesco, more than half the company's retail workforce and one-third of the union's total membership.

Countering the accusation that his union sold its bargaining rights at Tesco for easy access to new members, John Hannett admits: "We struggled with that, but what was on offer was a whole new level of involvement. Before it was all focused on the annual bargaining round. Now we have the chance to raise a whole range of issues, such as lifelong learning. We have access to senior decision-makers in every region and we can find out what members want and develop an agenda from the bottom up."

"If you take other agreements where the ballot exists but little else," he reflects, "you have to decide which is the better option."

The GMB also took flak from the left for signing a new partnership deal with Asda last year. The deal gives the union access to new recruits and to new stores - which managers had restricted since the takeover by Walmart in 1999 - and has helped boost membership numbers. It also provides shop stewards with time off for meetings and training, and introduces GMB learning representatives to stores. But, crucially, the agreement specifically excludes collective bargaining on wages, replacing it with discussions in a "listening group" on pay made up of shop stewards .

Pay matters

Pay rates for shopworkers have traditionally been among the lowest in the UK. Data from the New Earnings Survey (NES) from April 2002 show that average gross weekly earnings for male shop assistants and retail cashiers were £298.70, ranking them 74th out of 80 job classifications, while the comparable female wage was £238.30 placing them 75th out of 79 jobs.

IRS's monitoring of pay movements showed that, in the 2002/03 pay round, retail settlements - based on 122 reviews covering almost 1.2 million employees - lagged behind the 3% all-industry measure, at 2.8% (see Private sector pay in 2002/03). Fierce competition and price-cutting pressures in food retailing are usually cited as the reasons for low pay rates and low awards in retail.

Wages for many retail staff are pegged at the level of the statutory national minimum wage (NMW). When the NMW was introduced in 1999 at a rate of £3.60 for workers aged 21 and over, the Low Pay Commission predicted that retail would be the sector where a national pay floor would have the greatest impact, with more than half a million workers benefiting from its provisions.

Some of the largest retailers still track the NMW. In October 2003, Somerfield made an extraordinary second pay award to raise its starter rate for customer service assistants from £4.45 to £4.60 an hour, reflecting the lift in the NMW adult rate to £4.50 from the same date. Earlier in the year, Safeway had anticipated the rise by moving its minimum rate to £4.50 from April 2003.

The large number of school-leavers in the retail workforce has led USDAW to campaign since the introduction of the NMW for its extension to 16- and 17-year-olds who were exempted from the original legislation. The union's research found young retail staff on rates as low as £1.25 an hour, and its negotiators had already achieved a small success by persuading the Co-operative Employers Association to apply the NMW youth rate to under 18s. In March this year, the campaign bore fruit when the government announced that, from October, 16- and 17-year-olds will be subject to a minimum rate of £3 an hour.

Campaign trail

Since the introduction of Sunday trading in 1994, USDAW and the GMB have fought to restrict a compulsory element to weekend and holiday working and then to preserve enhanced pay rates - but with limited success.

"Though we were told repeatedly there was protection and premium payments, we always knew that Sunday would become another trading day," Hannett admits, "and many employers have reduced their premiums."

But in another example of political pressure proving more effective than traditional industrial relations, USDAW's recent campaign to end Christmas day opening does seem to be bearing fruit. The government is backing a private member's bill sponsored by the union to restrict opening by large stores on 25 December. A separate bill going through the Scottish Executive seeks to ban trading on Christmas day and New Year's day north of the border.

Another USDAW campaign in recent years has been Freedom from Fear, intended to reduce the number of threats and violent attacks on retail workers. Although the British Retail Consortium's (BRC) retail crime survey showed that in 2002 only 18 out of 1,000 shopworkers had suffered physical attacks, this was a 260% jump on the 2002 figure.

USDAW says there have been 48,000 incidents of violence, threatening behaviour or verbal abuse against shop staff since 1995.

So far, the union has persuaded 12 major retailers - including Tesco, Safeway and Sainsbury's along with the Association of Convenience Stores - to sign up to a charter committing them to a zero-tolerance policy on abuse towards staff.

"Many of the major companies we are working with are in discussions on updating or amending their policies on crime in the stores," says Hannett. "The other thing it has done is raise awareness among our own people about what they should and shouldn't do in these cases."

On the distribution side, the GMB, TGWU and USDAW are focusing on protecting their members from the effect of the extension of the Working Time Regulations in 2005 to include drivers. "Some of our members work up to 70 hours a week," says TGWU spokesperson Andrew Dodgson. The Regulations will limit them to 48 and we are working with distribution companies to make sure that happens without loss of pay."

This article was written by Louis Wustemann, a writer and consultant on employment issues, lw@sivill.demon.co.uk.