A report claims the largest retailer’s presence in other markets has hurt small businesses, retail workers and farmers
The Minister of State for Commerce and Industry in a written reply to the Rajya Sabha said FDI in multi-brand retail without adequate safeguards would lead to widespread displacement and poor treatment of the Indian workers in logistics, agriculture and manufacturing. The minister was quoting from a Switzerland-based UNI Global Union paper titled ‘Wal-Mart’s Global Track Record and the implication for FDI in multi-brand retail‘.
The report which examines Wal-Mart’s track record has been prepared especially for India as it is contemplating FDI in multi-brand retail.
Here are the salient points of the report:
- Wal-Mart has a negative impact on both retail worker wages and total retail employment
- Wal-Mart workers earn an estimated 12.4 per cent less than retail workers as a whole and 14.5 per cent less than workers in large retails
- Wal-Mart has had a devastating impact on small businesses in the surrounding areas
- The report cites research findings from the United States Census Bureau saying that the entry and growth of hypermarkets has a huge negative impact on employment growth and survival of single-unit and smaller chain stores
- Wal-Mart’s global reach impacts supply-chain intermediaries
- Wal-Mart pushes prices paid to farmers and manufacturers down instead of raising them
- Supply of products for sale in Wal-Mart stores, the potential effects of FDI in retail include an increase in imports, price pressure on Indian producers, particularly SMEs and depression of pay and conditions for manufacturing workers and farmers.
- As Wal-Mart expanded it brought its business models to other parts of the world, it depressed labour standards in its stores, pushed SMEs and socially responsible employers out of business and created a far-reaching global sourcing system that pits workers earning poverty wages in sourcing countries against each other.
- Wal-Mart transfers a large portion of its costs onto the suppliers and producers that it works with. The company is so large that it has the power to dictate the terms of contract, including turnaround time, quality, quantity and price.