The ugly face of greed in commerce: Social dumping and management by fear—Lidl wants to be the Wal-Mart of Europe

UNI, 26 March 2004

German hard discounter Lidl is fast emerging as a B-class copy of world's largest retailer Wal-Mart. Owned by entrepreneur Dieter Schwarz, the store chain is expanding all over Europe. Wherever it can, and particularly at home in Germany, Lidl goes to great lengths to stop its workers from joining trade unions. The hard discounter's management culture appears to be particularly ugly, as workers and suppliers are treated with equal harshness.

Management by fear is a frequently used description. A series of articles in the leading German daily Süddeutsche Zeitung gives a glimpse of how the company treats its workers:

For years she had stood out with all of this, the humiliations by customers, the constant lack of confidence, writes the newspaper about a discussion with a former Lidl cashier, who worked ten years for the company. When one was ill, one had to visit the district supervisor.

After work, in her store, coats, handbags and cars were inspected: Then I came always without a coat or handbag, I was afraid that they would put something into them, the ex-worker said: One had to be on the job 15 minutes before the working time began. On Fridays, one did often not yet know when one should work on Monday.

Middle level managers trained in Germany to do the dirty work?

The information which UNI Commerce has collected from its affiliated trade unions in different parts of Europe supports this view. Even in countries where the company has had to adapt to normal labour relations rules, the working atmosphere is poor, and workers are afraid. There is a clear pattern which shows that middle management, young people who trained at Lidl's facilities in Germany, are programmed to approach their personnel with suspicion and mistrust. In exchange for doing the dirty part of the work, they are reportedly well paid.

Human resource management apparently has only one aim: To maximise the profits of Mr Schwarz and his family. Store managers are under enormous strain as personnel levels are strictly tied to sales. It is hardly surprising that extremely long working weeks, and pressure on personnel to do unpaid hours, are frequently reported on.

Also suppliers are badly treated

If Lidl's workers are threatened badly, so are suppliers. A recent article in Managermagazin said that Whereas the deeply catholic Aldi-brothers become unpleasant only when there are quality problems, but otherwise are fair with their suppliers, the Lidl buyers exert enormous pressure.

In the European retail trade environment, Lidl's operating model appears as a sore tooth. Mr Schwarz and his discount chain managers apparently believe that they can recreate a Wal-Mart in Europe, based on social dumping and poor employer behaviour.

This is a mistake. Next week, Europe's commerce trade unions will meet in Tampere, Finland. They will set up a cooperation network and start coordinated action, to show the German company that it has to adapt to the normal rules of corporate behaviour in Europe.

Perhaps Mr Schwarz and his colleagues should take a closer look at the statement on corporate social responsibility, which the European social partners for commerce signed in Brussels last November.