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From The Socialist newspaper, 4 September 2019

What strategy can end the retail jobs massacre?

Retail bosses are taking out reduced profits on their workers, photo by fsse8info/CC

Retail bosses are taking out reduced profits on their workers, photo by fsse8info/CC   (Click to enlarge)

Iain Dalton, chair, Usdaw Broad Left

The last few years have seen swathes of closures of shops across the UK as whole chains have collapsed while others close considerable numbers of stores. In 2018, the Centre for Retail Research said that 18,443 stores closed, while 137,719 retail jobs were lost, the worst year since the 2008 economic crash.

The huge scale of this crisis, which looks set to grow in 2019, has forced the shop workers' union Usdaw to launch its Save Our Shops campaign.

The second day of action was at the end of June, in addition to the launch of the union's Industrial Strategy for Retail at parliament, attended by MPs including Labour's shadow chancellor John McDonnell.

The strategy makes numerous suggestions derived from policy passed as Usdaw conferences - many of which socialists fully support. These incorporate the major points of Usdaw's Time for Better Pay campaign, such as changing redundancy law to remove the loophole which allows chains to close stores of less than 20 employees without consultation.

The Save Our Shops campaign itself is summarised in three core demands:

4.5m jobs

Despite the crisis, retail remains an important part of the UK economy. It is the largest employment sector with 3 million people employed and a further 1.5 million jobs directly dependent upon it.

Even with the growth of online retail, most shopping still takes place in stores. The strategy cites statistics showing that online sales accounted for 18.6% of all retail sales in the UK in March 2019.

It also cites Next's annual report for 2019 which pointed out that "every additional order online has increased variable costs, such as warehouse picking and delivery costs... Last year, every pound of Next business that transferred from retail to online cost an additional 6p."

Other interesting facts are that 80% of their online returns come through stores and half of their online orders are delivered to stores.

Online retailing is clearly here to stay. And in some areas, such as music and non-physical media, it may be very significant. But physical stores are still important to many customers.

This is reflected in online giant Amazon's moves to establish physical stores by buying the Whole Foods chain, establishing seven Amazon Go stores in the USA as well as various 'pop-up' shops. Indeed the strategy advocates retail companies establish a 'clicks and mortar' approach.

But online-only companies do benefit from an uneven playing field linked to the question of rents, taxes and business rates.

All retailers require adequate warehousing and a logistics network, but bricks-and-mortar retailers have the additional overhead of a network of shops across the country which accrue additional business rates to online retailers. For example, the strategy cites Tesco paying business rates of 700 million in 2016-17, while Amazon paid 63.4 million.

The report essentially argues for a reorganisation of taxes without coming down on a particular formula.

However, the strategy does quote Tesco CEO Dave Lewis saying: "I believe it's time to consider an online sales levy... 2% would raise 1.5 billion... that could fund a rate cut of 20%, levelling the tax playing fields between physical retailers and their online competitors."

This essentially would equate to a tax cut for the big retailers such as Tesco at the expense of the online retailers, in effect a form of protectionism for the bricks and mortar retailers.

Indeed, as the strategy points out, any cut in business rates would have a big impact on the finances of local government, which is increasingly dependent on this source of income due to government 'reforms' cutting their finances over the last decade.

The strategy also calls for reducing tax avoidance, which we would fully support. Yet it highlights the problem that even the most progressive tax reform will face attempts from retail companies to avoid it, stating "...we know of instances where online retailers are reporting their sales through separate companies registered in countries such as Luxembourg... There is no easy solution on this front."

Profit problem

This is because we are dealing with capitalist corporations driven by the need to maximise profits.

The report is hampered by its failure to recognise this source of the crisis in retail. Numerous points are made in the strategy about the short-term outlook of the retail bosses, but this is not fully drawn out.

It is the very nature of the capitalist system, driving companies by the need to generate profits to meet the demands of shareholders that forces them into this short-term outlook.

While some retailers, and indeed representative bodies such as the British Retail Consortium, may recognise this and even support some reforms, this is not the same as those retailers being prepared to be the first one to put their profits on the line and implement such reforms.

The strategy's approach to trying to win such demands includes "legislation to ensure that workers have guaranteed seats on the boards of large companies, with the same duties and responsibilities as other directors."

But the experience of British Leyland and other companies where such worker representation on boards existed in the past was that this was used to gag those representatives, forcing them as a minority to support the bosses approach. This inherently undermines collective bargaining for workers (which the strategy also supports) as their representative(s) on the board can be seen to be responsible for, or supportive of, employers' attacks on pay, terms and conditions, and other negative policies.

Indeed, retail workers are increasingly fighting the attacks by the bosses with strikes by Usdaw members at Tesco and Sainsbury's distribution centres as well as strikes at Matalan, Wilko and the looming Asda dispute around 'Contract 6'.

The crisis on the high street means that the big supermarkets are all cutting thousands of jobs and imposing worse terms and conditions. Retail trade unions should launch a joint campaign, including future coordinated industrial action, to stop this 'race to the bottom', instead of proposing workers sit on the boards waging these attacks.

Public ownership

The best way to develop the real 'collaborative approach' the strategy talks about is to remove the capitalist profit motive from the equation altogether to allow a genuine collaboration between working people across retail and associated sectors. The only way to do this is to bring the big retail companies into public ownership under democratic workers control and management.

At Usdaw's 2017 conference members passed a motion calling for raising "the question of nationalisation of companies who go into administration or other situations where the jobs of our members and other retail, distributive and allied trades workers are under threat."

The resolution went on to argue: "Bringing such companies into public ownership, would save jobs and stores, while the government could pursue their former owners regarding any alleged irregularities.

"Such nationalisation, should not be of a top down nature, but of one run on a democratic basis [to] allow staff representatives, customers representatives and the wider trade union movement to be involved in the revitalisation of these companies."

Usdaw should be putting forward the ideas from this proposition as the core of its industrial strategy for the sector. It means not bowing to the inevitability of job losses and store closures but fighting to take control of companies out of the hands of (mis)management that have led to such closures and staffing cutbacks.

This is also the most efficient way of making use of "the knowledge and experience of staff" talked about in the report.

This needs to be linked to a wider programme of public ownership including the banks, transport and big manufacturing companies to develop a democratically planned and integrated economy capable of meeting the material needs of ordinary working-class people.

Only such a strategy can save the high street while creating a society capable of delivering for workers.

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In The Socialist 4 September 2019:

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