What Is Really Behind Delhaize’s Plan?

Source: Solidaire, magazine of the PTB (Belgian Labour Party).

Workers at Delhaize (one of Belgium’s largest supermarket chains) are massively protesting against implementation of the franchise model which is expected to lead to layoffs, precariousness, and lower wages, as well as to endanger national unions and set a new franchising trend in the whole retail sector in motion.

Delhaize employees are making history. For the past weeks, they have been massively mobilising in Brussels, Flanders, and Wallonia. Many Delhaize staff are going on strike for the first time in their lives. On picket lines, they show a strong determination to not give up until management withdraws its plan to sell the 128 Delhaize-owned stores to independent operators.

The projected implementation of the franchise model at Delhaize is a setback for its employees, but also a trending pattern which is dangerous for the entire working class. This plan sets a downward spiral in motion: higher workload, more flexibility, increased precariousness… and lower salaries.

According to Delhaize management, the goal is to reach operational efficiency with a win-win model that will help secure the future of the business. But is the company’s future really threatened? Although profit margins are shrinking at all Belgian supermarkets as a result of fierce competition, Delhaize still recorded a €48-million profit in Belgium last year. Moreover, the Belgian company is part of the large multinational Ahold Delhaize, which made record profits of €2.5 billion last year. Hence, the statement that the company is at risk remains dubious: there is something else at stake.

The Ahold Delhaize website says that the company plans to buy back shares from its shareholders for an amount of one billion euros by 2023. Multinationals use this trick to artificially increase the stock market value of their shares. Main shareholders thus get a golden handshake: first, they receive a (high) dividend on all their shares, then they can resell part of those to Delhaize at a much higher price than they paid. Where will Delhaize one billion euros take from in order to pay its shareholders? From the employees, obviously. Dutch CEO Frans Muller announced in February that the company will save… 1 billion euros.

From retail chain to parasitic model

Delhaize is currently a chain retailer, a multiple store. It buys goods from many small suppliers and sells them to customers. Over the years, the company could acquire a dominant position over its suppliers. Being their biggest client, Delhaize can blackmail them into cutting their prices, thus reaping greater profits. This is an example of parasitic capitalism, with a capitalist absorbing other capitalists.

Delhaize now wants to apply this parasitic model to its stores. By turning all the stores into franchises, the brand will be able to force lower prices on suppliers and extract higher revenue from stores, now making huge profits at all levels. The consequence of this dual parasitic model is that now all workers and employees are exploited at their maximum level throughout the chain. The newly franchised “independent” operators will be squeezed like lemons. For franchise-holders to make a profit, the only ready solution will be to save money at the expense of the staff. But for Delhaize, whatever decision they take is no longer its concern.

And, of course, entrusting the brand to 128 different fake independents means that the big national Delhaize unions will vanish — every major retailer’s dream! “After Delhaize, others will follow”, the sector’s top leader says. The entire sector will soon be affected.

Delhaize employees might win

Management did not expect so much fighting spirit from the staff. Delhaize now tries to confuse the issue by promising to maintain employment, wages and working conditions. But, as a matter of fact, employees are not fooled. It is extremely easy for the company to make promises about everything and anything: once the stores are sold, the retailer will no longer be liable. As all franchised stores operate with fewer than 50 permanent employees to escape having a union delegation, redundancies are already expected to happen. As for remuneration and working conditions, independent stores are also subject to lower standards, which the new owner can impose in a contract amendment. Franchise-holders will thus be able to easily circumvent the famous “32bis collective agreement” aiming to preserve working conditions in case of a transfer of business. In the end, without a union, there are no guarantees. If franchising doesn’t change anything, why is Delhaize so keen on it?

So losing is not an option. Fortunately, the staff are in a good position to win. Fighting a multinational is like David against Goliath. It seems impossible, but it is possible. In recent years, against all odds, the workers of Ryanair and Lidl have also won victories against these large multinationals. In fact, there always comes a time when protest actions impact too heavily on the company’s finances and the management has no choice but to back down. What Delhaize workers and their unions have already shown they were capable of — despite all the pressure from management — is impressive: weeks of strike action, blockading of warehouses, protests at the company headquarters. Management is getting more and more nervous and admits: “These actions have caused huge losses, to say the least.”

The fight led by Delhaize employees should matter to us all. It is a fight for respect, decent work, and quality jobs — against a society giving precedence to large shareholders and their thirst for profit over anything else.

[Editorial note: The unions are calling for a demonstration in Brussels on 22 May to join Delhaize employees’ fight against social dumping and for better working conditions. The PTB is also calling on its members to make this demonstration a success.]

This article was first published in French on the website of the PTB.