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Sly supermarket

December 22, 2010

Lidl has surprised Germany by calling for a 10-euro ($13) minimum hourly wage for retail workers – that's higher than the level being demanded by trade unions. Critics suspect the supermarket chain has ulterior motives.

Lidl sign
Lidl pays its employees at least 10 euros an hourImage: picture-alliance/ ZB

"Equal work – equal wages. Good work – fair pay." It could be a slogan scrawled across banners carried by disgruntled employees at a strike march. In fact, the above motto comes from a statement released by Juergen Kisseberth, director of discount supermarket chain Lidl in Germany.

Kisseberth's catchphrase comes amid ongoing negotiations over a minimum wage for the 2.7 million people working in Germany's retail sector.

Exploratory talks between service industry union Verdi and the German Retail Federation (HDE) are set to end some time in January. Representatives have been weighing up an hourly base wage of somewhere between 7 euros ($9.20) and 8.80 euros. But now Kisseberth has set a cat among the pigeons by proposing a much more radical rate of 10 euros.

"Lidl is very interested in seeing the discussion on the minimum wage stay relevant on a political and social level," Kisseberth's statement read. "And that this discussion results in a fruitful and effective decision by law-makers."

Verdi protestors
Verdi is currently in negotiations with HDE over a new minimum wageImage: AP

This begs the question of what Lidl has to gain by such an effective decision. Recent years have, after all, seen Lidl come under fire for treating employees and suppliers poorly on a number of occasions.

"Lidl has always supported the minimum wage," Lidl spokeswoman Gertrud Bott told Deutsche Welle. "We already brought up the issue at the beginning of the year, without actually mentioning a concrete figure. But we brought it up now because it is a political discussion at the moment."

Pressuring the competition

Some critics, such as Ulrich Schulte from Die Tageszeitung newspaper, suggest that the answer might lie in Lidl's own comparatively generous wage rates.

Lidl has been paying all its workers – including part-timers – at least 10 euros an hour since March. According to the company's own data, nearly 50 percent of Lidl employees receive 13 euros an hour.

If Lidl's competitors were forced to match these rates, they could easily find themselves having to restructure and re-think their business plans.

Something similar happened at the beginning of 2008, when a minimum wage was introduced for postal workers. At 9.80 euros an hour, the new minimum lay well below that paid by Deutsche Post, which still enjoys a post-monopoly position of dominance. Other smaller postal operators such as Pin and TNT, however, were forced to raise their wages. Pin declared insolvency not long later.

Bott refused to be drawn on such speculations. "We already pay that (10 euros), and we can only speak for ourselves," she said.

Means or ends

Verdi, for its part, sees this discussion as somewhat abstract. The trade union's spokeswoman Cornelia Hass is not too fussy about the motivations of this surprising new ally. "From our point of view, this is something that brings an advantage to many people," she told Deutsche Welle. "We could discuss philosophically whether the motivation is more crucial than the result. But I don't think tariff politics or negotiations should be so philosophical."

"We welcome the statements. We hope that this good example will be followed by other chains," Hass added. "A lot of retailers think it's acceptable to pay wages that their workers cannot live on in order to keep a competitive edge. Lidl pays good wages but still has a good competitive position. There really is no more convincing argument."

Former Lidl boss Frank-Michael Mros
Mros was sacked when it emerged that Lidl had kept files on its workersImage: picture-alliance/ ZB

There is also a suggestion that Lidl is attempting to clean up its poor reputation concerning employees' rights. Early last year, Kisseberth's predecessor Frank-Michael Mros was sacked after it emerged that the chain had illegally collected private data on its employees, including the state of their health. Like many bargain supermarkets, Lidl has also been accused of exploiting "sweat-shop" working conditions to produce cheap clothing in Asia.

"Lidl is not exactly a company that has been covered in glory when it comes to dealing with its employees," admits Hass. "But now they are doing something that we welcome. This is a positive signal, but they will have to go a lot further before you hear me calling them a model company."

Unhelpful intervention

The German Retail Federation (HDE) is understandably less happy with Lidl's contribution to the debate.

"We've got nothing against it when companies speak out against low wages, but do have a different view of how this should be done," HDE spokesman Heribert Joeris said. "We don't believe in one unified minimum wage, but in branch specific minimum wages. That way we can really agree on the right minimum wage depending on the industry and the region."

Across Germany's political spectrum, only the Left party is calling for a single unified minimum wage in line with Lidl's vision. The center-left Social Democrats and the Green party do not support a single minimum wage of this scale.

Author: Ben Knight
Editor: Sam Edmonds

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