Tuskys workers strike threatens sales in peak Xmas season

Tuskys Supermarket stores were Thursday shut down after the chain’s 7, 000 workers went on strike, highlighting the rising spate of industrial action in Kenya’s retail sector.

The workers, through the Kenya Union of Commercial Food and Allied Workers (KUCFAW), are protesting the failure by the retail chain to effect a 10 per cent wage rise agreed in November, the withdrawal of overtime pay and house allowances.

“We are demanding full implementation of the CBA we signed last month and which was deposited at the Industrial Court. We also want overtime reinstated and paid at double the employee’s rate for normal hours,” KUCFAW chief steward at Tuskys Samson Omechi said.

Tuskys said it was looking into the workers’ grievances and was pursuing a deal to end the strike.

“We are crafting a return-to-work formula,” said Peter Mwenda, general manager in charge of human resource at Tuskys, without giving further details.

The workers’ strike highlights the push for better salaries in Kenya’s retail sector that is gripped by a vicious market share war and thinning margins, which also prompted a pay dispute between Uchumi Supermarkets and its workers in October.

READ: Uchumi workers plan strike to push for better salaries

KUCFAW is also locked in a court battle seeking to compel Kenya’s third largest retailer Naivas to allow its workers to be members of the union, which also represents Nakumatt and Uchumi workers.

“We are currently in court to require Naivas to sign a recognition agreement with the union, which will allow its staff to join KUCFAW,” said Bonface Kavuvi, the union’s secretary-general.

The union says it deposited Tuskys collective bargaining agreement (CBA) with the Industrial Court on December 9, adding that the retail chain had declined to pay overtime for last month and refused to implement the deal to the letter.

Tuskys, which has 45 stores in Kenya, entered the CBA committing to raise the basic minimum wage for its employees by 10 per cent in the year from March this and by 11 per cent from March 2014.

The agreement also entitled Tuskys employees to at least a day off in a week, 23 leave days per year, overtime pay at double the normal hourly rate, lunch break, house allowance and paid sick leave.

Before the agreement, the workers had two off days per month, 21 leave days and had their overtime pay withdrawn. The overtime allowances range between Sh8,000 monthly for the lowest paid worker and a maximum of Sh13,000.

The workers’ strike comes as Tuskys embarks on a massive expansion spree, with the planned acquisition of some outlets owned by rival retailer Ukwala. Kenya’s second-largest retailer is now running Ukwala stores in Nairobi and has started rebranding the outlets.

READ: Tuskys rebrands Ukwala amid takeover probe

It marks the first major deal for Tuskys, but workers allege the buyout is straining the retailer’s resources. “The acquisition of Ukwala Supermarkets is putting a strain on the meagre resources allocated for paying salaries of the current employees,” the union said in a statement.

Tuskys is moving to consolidate its market share ahead of cash-rich rivals, including foreign firms like South Africa’s Massmart , which are showing a keen interest in the Kenyan market.

The threat of the new entrants and expansion by players like Uchumi, Naivas and Nakumatt has upped competition and narrowed trading margins, pushing operators towards a low-cost base.

If the strike persists, it would hit the supermarket’s earnings given that Christmas and New Year holidays are the peak season for retailers. The countrywide industrial action threatens the success of one of Kenya’s exemplary entrepreneurial stories given its humble beginnings four decades ago as a duka.

Tuskys reported sales of Sh25.2 billion in 2011 and saw its profit grow by a third or 32 per cent to Sh323 million. Its wage bill stood at Sh1.9 billion in 2011 and accounted for 7.4 per cent of its revenue.

Uchumi’s labour costs of Sh589 million stood at 5.4 per cent of its Sh10.7 billion sales in 2011. In October, a threat by about 3,500 Uchumi workers to down their tools forced the management to honour a CBA that awarded them a 10 per cent salary hike.

Tuskys is embroiled in a fierce family feud pitting the seven siblings who inherited the business from their late father, Joram Kamau.

The siblings allege that their brother Stephen Mukuha, Tusky’s managing director, had siphoned money from Tuskys’ account to related firms which were trading with the supermarket.

The business is run by seven siblings including Mr Mukuha, and directors Yusuf Mugweru, John Kago, George Gachwe, Sam Gatei, Mary Njoki and Kenneth Mwangi Njeri.