Wal-Mart Stores, Inc. (WMT) Tries Subtle Cost Cutting Measures In China And It Backfires

walmartTyler Durden:  As we have covered ad nauseam, companies who rushed to perform the most altruistic of favors to workers by raising wages are now facing the realization that profitability simply can’t be maintained, and thus are taking measures to cut costs (ie: firing people or reducing hours).

Our current title holder for most actions taken as a result of trying to appease the living wage crowd is Wal-Mart Stores, Inc. (NYSE:WMT) of course, who has already closed stores and fired massive amounts of people as a result of increasing wages. More efforts are also on the way, recall that WalMart is also testing the use of drones in distribution facilities in order to facilitate even more layoffs.

Now, just as the case was with Starbucks, WalMart is tinkering with employee work hours in order to try and figure out a way to reduce costs but make it appear as though that isn’t the case. This time, however, the company is testing it out in China, which unlike the US is unionized and will be much more disruptive to operations as the unions begin to protest the change in hours.

Employees said WalMart wants them to work 11 hour shifts on the weekends and as little as four hours on the weekdays under a system the company began to roll out in June. Some employees believe the change will result in lower pay and interfere with their ability to work second jobs. The proposed changes have led to protests already, something China is very sensitive to as it tries to ensure as little civil unrest as possible takes place in the country at a time when the economy is weakening. Last week, staff members protested on Friday and Saturday outside WalMart stores in the cities of Nanchang and Shenzhen in Southern China, Chengdu in the west and Harbin in the northeast AP reports.

A cashier who has worked at the Nanchang store for more than five years said her monthly pay of about $215 to $245 has fallen about $11 under the new system – the legal minimum wage in Nanchang, the capital of Jiangxi province, is $235 according to AP. The employees are unlikely to get a raise in the next few years either said the cashier, adding “what worries us more is that they are preparing for the future. Will we be cut off in the future and get no compensation, like the part-time workers?”

Managers have presented the new scheduling system, and employees were creatively being forced into signing new contracts that allowed the changes to be implemented, as the option to continue to work under the “old” contract was left on the table, but the paycheck would miraculously get smaller as meal subsidies and other payments were eliminated.

As AP explains,

Managers presented the new scheduling system in May and encouraged employees to sign new contracts to authorize the change, according to employees. Under Chinese law, full-time employees work under two-year contracts.

“The workload is very heavy because we have to stand for 11 hours,” said another employee of the Nanchang store, who asked not to be identified by name for fear of trouble with the company or Chinese authorities. “All the employees felt it was too difficult and were very unhappy.”

Employees were told they could keep working under previous contracts if they wanted, but those who did so found their paychecks were smaller because meal subsidies and other payments were eliminated, according to the employee in Nanchang.

An activist group, China Labor Watch, said employees were pressured to sign the contracts by being told they could not leave meetings where the new system was announced until they did. Wal-Mart did not respond to a question about whether that happened.

Employees expressed concern the system could be abused to induce unwanted workers to quit by giving them awkward shifts, eliminating the need to pay severance.

Traditional retailers have been battered as Chinese shoppers shift to shopping online. Total retail sales rose 10 percent in May compared with a year earlier but that was down from 13 percent in 2014. Meanwhile, online commerce grew by more than 30 percent.

Wal-Mart, headquartered in Bentonville, Arkansas, has expanded to 433 stores in China, but that is less than one-tenth as many as its 4,655 outlets in the United States.

Some frustrated employees have taken to social media to communicate, and authorities are investigating whether groups are taking money from foreign organizations that may be spurring the unrest – or,

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