Human Rights Watch, a non-governmental group based in New York, is best known for scathing reports on political issues such as the Rwandan genocide and the Congo's use of children in its military. But late on Apr. 30, the human rights group focused on Wal-Mart (WMT), issuing a report that charged the giant retailer with using strong-arm tactics and, in some cases, illegal means to stop its workers from forming unions. In a 210-page report, the organization says "the retail giant stands out for the sheer magnitude and aggressiveness of its anti-union apparatus."
This is only the second time in the organization's 29-year history that it has issued a book-size report on a corporation. The first one was on Enron in 1999. The study's author, Carol Pier, says the group decided to focus on Wal-Mart because of its broad impact on labor practices and the U.S. economy. "Wal-Mart is the largest private employer in the world. Therefore, the way it treats its workers matters," says Pier, senior labor rights and trade researcher at Human Rights Watch. "Our message is that when the world's largest economy has labor laws that are so weak that it is unable to prevent the world's largest corporation from violating workers' rights to organize, it is troubling."
The Retailer Reacts
Wal-Mart disputed the conclusions of the study. "Contrary to the allegations in this report, Wal-Mart respects our associates' right to a free and fair unionization vote through a private, government-supervised process and we remain committed to compliance with U.S. laws regarding workers' right to unionize," the company said in a statement. "Wal-Mart provides an environment of open communications and gives our associates every opportunity to express their ideas, comments and concerns. It is because of our efforts to foster such an environment that our associates have repeatedly rejected unionization attempts."
The company also said that the Human Rights Watch study was part of an effort to influence legislation under consideration in Congress. The proposal, supported by unions, would allow organizers to create a union at a company if workers publicly signed cards in favor of one, as opposed to voting for one in private balloting.
"This pro-union report uses incomplete interviews and unsubstantiated allegations from as much as six to seven years ago to support a union-backed bill before Congress that eliminates workers' rights to a private-ballot vote on unionization," Wal-Mart said.
The report comes as Wal-Mart is drawing fire from several sides. Politicians have criticized the company, particularly Democratic Presidential candidates such as Senators Barack Obama (D-Ill.) and Hillary Clinton (D-N.Y.) (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart?"). Community groups and local retailers have opposed stores in certain areas. And at the same time, shareholders have been frustrated by the company's stagnant stock price. One analyst at JPMorgan Chase (JPM) says the stock has been "dead money" (see BusinessWeek.com, 4/27/07, "Wal-Mart's Mid-Life Crisis").
The Human Rights Watch report states that U.S. laws allow Wal-Mart unusual latitude to fight against union organization efforts—and that Wal-Mart goes beyond those laws in some cases. Pier's report says that the company tries to persuade workers and managers to oppose unions from the moment they are hired. Managers receive explicit instructions on keeping out unions, many of which are found in the company's "Manager's Toolbox," a self-described guide for managers on "how to remain union free in the event union organizers choose your facility as their next target."
If workers try to organize, store managers must report it to Wal-Mart's Union Hotline at headquarters. The company responds by sending out its Labor Relations Team almost immediately to stall or stop the organizing effort, the report says.
'Climate of Fear'
A former Wal-Mart store manager says his experiences were consistent with the assertions. Daniel Jackson worked at the retailer for 12 years, until March, 2006, and was a store manager in Safford, Ariz. "When brand-new associates start out, they are shown a video that might as well be called an anti-union video," he says, "because it says that Wal-Mart is a great place to work and that there is no need for unions who can't guarantee better vacations or benefits or better pay—the only thing that a union can guarantee is your dues."
He adds, "The video says that we don't think our associates should pay their hard-earned money to have somebody else talk for them and that Wal-Mart's open-door policy speaks for itself." Jackson says the "manager's toolbox" had been replaced with an online "manager's workbench," which essentially detailed the same rules on how to handle union activities at the store level.
The Human Rights Watch report says that Wal-Mart's anti-union actions create a "climate of fear" at its U.S. stores. The report says that interviews with 41 former workers and managers revealed that, among other things, Wal-Mart has allegedly ordered the repositioning of surveillance cameras to monitor union supporters, told workers they will lose benefits if they organize, and fired workers for their union activity.
Taking a Union Pulse
Former store manager Jackson says he wasn't aware of any spying, but that the company used to have something called the "UPI," or the "union predictor index," a score based on surveying its workers each year. There were more than 35 questions, such as, "Would you recommend a friend to work at Wal-Mart?"
Today, the UPI no longer has an explicit union reference. It has been changed to a more generic "unaddressed people issues" and all associates are expected to participate. "Even low participation can set off red flags and can be an indication of potential problems," says Jackson. "Stores that had high scores and where there was an indication of gatherings in small groups, the company would in effect fly in a crew within 24 hours and take over the store and start talking to each associate."
Jackson points out that Wal-Mart is very effective at sending its anti-union message. He says there was a chill felt among workers after the company closed a store in Jonquiere (Quebec), Canada, in May, 2005, soon after its workers voted to make it the first unionized Wal-Mart in North America. Similarly, in 2000, it eliminated its meat department after 11 meat cutters voted to join a union in Jacksonville, Texas.
Wal-Mart spokesman David Tovar points out that only 5% of all retailers are unionized. He points out that Wal-Mart's average, full-time hourly wage is nearly double the federal minimum. "Unlike other retail employees, every Wal-Mart associate, both full- and part-time, can become eligible for health coverage. And that coverage is available for just $23 per month anywhere in the country, and only $11 per month in some areas."
Pier takes issue with a number of Wal-Mart's specific responses. She says that Wal-Mart's claim of an average hourly wage of more than $10 is misleading because it includes hourly-wage managers as well as non-managerial staff. She also says that the company's assertion that it provides low-price health-care coverage doesn't take into account that many of the plans have high deductibles that can make them much less useful.
But, she says the goal of the Human Rights Watch report is to make more general points. First, the study makes the case that U.S. laws for worker protection are not as rigorous as in other countries. Second, it argues that a company as big and powerful as Wal-Mart can take advantage of those laws for its own benefit. Pier says the group's goal is for Wal-Mart to cease all tactics that undercut workers' right to organize and to go a step further as an industry leader and pledge neutrality on union formation. She says that Wal-Mart workers "have come to the realization that the one-two punch of Wal-Mart's anti-union strategy and weak U.S. labor laws is something they cannot compete with."