Wal-Mart faces employee dispute

Wal-Mart stores in China. GT

Leading US retailer Wal-Mart Stores Inc said Monday that it is having "close and sincere" communication with employees from its recently closed Changde store with whom it is currently engaged in a labor dispute.

Wal-Mart's Shuixinglou Store in Changde, Central China's Hunan Province, ceased operation Wednesday. The involved employees can either choose to stay with Wal-Mart and work in stores in other cities or terminate labor contracts and get compensation according to China's labor laws, read a statement e-mailed to the Global Times Monday.

"If you have worked in the Changde store for one year, you will be compensated with 13 months' salary after leaving," a PR representative told the Global Times.

For those who will choose the first option, they will be offered a salary that will be adjusted to match the income level of the city they move to and relocation support including transportation expense and the settlement allowance, said Wal-Mart.

But 121 of 135 employees in the Changde store were not satisfied with Wal-Mart's closure program, as they refused to make a choice and have gathered in front of the store entrance every day after the closure date.

"I want to continue working in Wal-Mart, but this means I have to leave my hometown and move the whole family to Yiyang, where the nearest Wal-Mart store is, but that is still 100 kilometers away from Changde. This is unaffordable, as the company offer no relocation support, just basic salaries to common workers," an employee surnamed Shuai told the Global Times Monday.

He noted that only senior executives get relocation support.

Another demand is that most employees expect more compensation, twice the current amount offered by Wal-Mart, as the closure did not follow the proper procedure such as informing the employees one month in advance, Huang Xingguo, head of the labor union in Wal-Mart's Changde store, told the Global Times Monday.

"The union and employees got the notification of shutdown and compensation plan on March 5. On the same day Wal-Mart forced the 135 employees to make a choice before Wednesday [March 19]," said Huang. The labor union has hired a lawyer to help employees and may file a lawsuit if they cannot reach an agreement.

Employees have the rights to claim more compensation, if they can prove the company did not carry out the store closure in accordance with the proper laws and regulations, a Beijing-based lawyer surnamed Gu told the Global Times, suggesting the two sides can settle the disputes through mediation instead of costly lawsuits.

Wal-Mart said they are maintaining communication with affected staff members at the store for now.

The closure of the Changde store is a part of Wal-Mart's nationwide store closure plan that was announced in October 2013.

"In order to have long-term and quality growth in China, while we continue expanding in China and will open 110 new facilities over the next three years, we will close some underperforming stores in some regions," Wal-Mart said in the statement.

According to the company's financial reports, it closed 29 stores in China during the fiscal year ending January 31, 2014. But the total number of stores still grew, reaching 405 by fiscal 2014, compared to 393 in fiscal 2013.

The expansion is still slow when compared with its local rivals such as Beijing-based Wumart, making Wal-Mart unable to get better prices from goods suppliers in the market, said Yan Qiang, an industry analyst with Beijing-based Hejun Consulting.

In addition, many supermarket operators including Wal-Mart are undergoing a hard time in the Chinese market and are being forced to close stores, citing the sluggish performance of the retail industry since 2012 and booming online shopping, Yan told the Global Times Monday.

He noted that foreign retailers are undergoing a more difficult time than their domestic peers because the former spend more on management and do not have a better understanding of Chinese people's shopping habits such as preferring to make small-scale purchases many times a week instead of buying groceries one week at a time like foreign consumers do.