Can Pick n Pay avoid a union war?   

What a way to celebrate May Day! Hand out section 189A notices to 22,000 of your employees.

It certainly doesn’t seem to have been expected by Pick n Pay’s trade union officials, who thought they were in the midst of constructive discussions aimed at mapping a way forward for the struggling retailer.

A hefty 60% of the 22,000 employees are members of a union, overwhelmingly the South African Commercial, Catering and Allied Workers’ Union (Saccawu).

“We left the discussion with [CEO] Sean Summers and management on April 28 after proposing to call a national meeting at which management could take the union through precisely what it was they wanted to achieve,” Brenita Cloete, first deputy president of Saccawu tells Currency. “As far as we were concerned Sean had agreed with the union to take the issues to the negotiating table.”

It wasn’t just the workers; some analysts also seemed taken aback at the suddenness of the section 189A move; one referred to it as a “bombshell”.

Kwanele Ngogela, senior inequality analyst at Just Share, reckons the timing might have been designed in anticipation of the proposed introduction of section 9B of the Basic Conditions of Employment Act. The new legislation is intended to enhance the employment conditions of vulnerable workers, and the industry is expecting it to be costly.

Hard-fought rights

Not that something dramatic wasn’t expected. Financially, Summers has had to dig Pick n Pay out of a deep hole – and the company is still losing money. In February, it warned the market to expect a wider full-year loss when it reports numbers later this month. That’s even after unbundling and listing Boxer, its best-performing asset, and a painfully discounted R4bn rights issue it was forced into in 2024 to slash its debt.

Summers has also stressed that the section 189 talks are about avoiding job losses by introducing a more flexible approach to what he calls the retailer’s “increasingly inflexible” staffing model.

Cloete says everyone knows about the difficulties facing the group. She’s aware pragmatism is necessary, but stresses that management mustn’t expect workers to just walk away from hard-fought rights. And while trading conditions have been tough, the reality, says Cloete, is that for several years the group’s leadership hasn’t been up to the task. She dismisses the notion that Pick n Pay’s troubles are grounded in labour issues.

Still, understandably, workers are not prepared to take the rap for consecutive years of poor management.

Cloete seems particularly irked by the appointment of not one but two foreign chief executives in a row. And inevitably is unimpressed by the fat remuneration packages they were awarded. “Pick n Pay keeps employing top executives at huge levels of pay while all the time claiming it can’t afford to make ends meet,” she says.

Whether or not it would have been easier to accept the executive generosity if the group had performed better is a whole other matter. But the grim reality across industry is that management’s response to perceived competitive forces often results in ever-increasing generosity for executive employees (with relatively scarce skills) while low-skilled workers are squeezed.

It wasn’t just the dramatic issuing of section 189A notices that irked Saccawu. Public statements made by Summers also seem to have ruffled union feathers. He talked of staff being required to work on a roster basis; some being required to work on Saturdays and Sundays; a review of minimum guaranteed hours; and changes to some of the terms of the current three-year agreement, as though they were done deals, says a union executive.

‘Mother of all battles’

Saccawu deputy general secretary Jerry Mmoneri’s statement responding to Summers is replete with the sort of fighting talk likely to send a chill through shareholders: “We are preparing for the mother of all battles whereupon workers will protect their livelihood and wellbeing, which the company wants to trample upon and erode as if it was nothing.”

For workers, the grim reality is that because Pick n Pay is facing an existential crisis, management is eventually likely to have its way, or at least most of it. In this context, having its way largely means having a flexible workforce. Allowances and benefits are also likely to come under the knife. (Summers has hinted at some job losses, which are typical in section 189A processes, but says he hopes to avoid this.)

Flexibility in the retail sector means having a workforce that is constantly able to adapt to consumer shopping habits. A 100% flexible workforce is management’s holy grail.

By Summers’ telling, Pick n Pay has nothing of the kind. He says 12 years of concessions have left the group overstaffed during weekdays and reliant on part-timers for evenings and weekends when stores are busiest.

Mmoneri counters that Summers’ claims are misleading. “All employees work a mandatory Saturday shift, while some already work on Sundays.”

Ngogela also challenges the assertion that Pick n Pay’s employees (both permanent full-timers and permanent part-timers) enjoy better pay rates than others in the sector; Summers said this week that staff are paid 1.5 times their rates for working on Saturdays and two times rates for Sundays.

But, says Ngogela, “Pick n Pay makes lots of claims such as ‘we’re among the best payers’ or ‘on average we pay above the sector’, but without the sort of data required by the proposed amendments to the Companies Act, it’s impossible to know what the true position is.”

Battle-hardened

However, Pick n Pay’s permanent employee turnover is 24%, only slightly above Shoprite’s 23.6%. Woolworths, the undisputed best payer in the market, is at 17%.

Cloete believes management is now intent on ramping up the current three-year agreement in terms of which permanent full-timers comprise just 40% of the workforce and the more flexible permanent part-timers account for the remaining 60%. Core to this will be the cutting of 20 hours a month from the permanent full-timers.

The next few weeks will be critical for all concerned. Summers, who has union battle scars dating back to the 90s, when the relationship was particularly fractious, is alert to what is at stake. He believes issuing the section 189A notices was unavoidable.

“The 189A is unfortunate, but it is a necessary part of the process given the situation the company is in,” he tells Currency. Whether or not Mmoneri agrees, Summers says the retailer is “currently in discussion with our labour leadership structures and the union, which is the most important thing”.

While the issuing of section 189A notices took some by surprise, other analysts say it was inevitable from the day back in May 2023 when Summers stepped back into his old job. Well, not quite his old job. In 2007 when Summers left, Pick n Pay was a far more robust operator and still enjoyed a prominent position in the market. But even then cracks were appearing, and a formidable competitor in the form of Shoprite was on the rise.

Plenty at stake

There’s much at stake, on both sides. By some counts almost 500,000 people are able to sit down at night and have a meal thanks to someone’s job at Pick n Pay. That’s six people for each of the group’s 90,000 employees. (That 90,000 figure comprises 32,000 at Boxer, 26,000 at Pick n Pay franchise stores, 22,000 non-management bargaining unit workers and 10,000 in management.)

It may be quibbling to point out the Boxer jobs are secure whatever happens to Pick n Pay as there are still thousands of livelihoods at risk. But it’s no small irony for the unions in particular that Boxer’s security is helped by the fact it has an employment model closer to that of Shoprite than its former parent.

It means that propelling the company back onto a growth trajectory isn’t just about securing shareholder value or ensuring consumers enjoy the benefits of a reasonably competitive retail environment, it’s about protecting the livelihoods of hundreds of thousands of people.

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