Archived press release

Shareholders warned about the price of Tesco's record breaking profits

7 July 2006

Shareholders attending the Tesco AGM today in London will be warned by the Tescopoly alliance that Tesco's massive market power is having serious consequences for suppliers, farmers, overseas workers, local shops and the environment. Tescopoly will be calling for better regulation of companies to stop the damage both here and overseas.

A new report from Labour behind the Label exposes the wage levels and working conditions faced by garment workers in Bangladesh, where Tesco's growing range of clothing, including its £3 jeans, is produced (1).

The Tescopoly alliance includes Friends of the Earth, War on Want and the GMB London region (2) and represents the growing number of people - from small farmers and workers to local shoppers and environmental groups - concerned about the unregulated power of Tesco which now controls more than 30% of the grocery market (3).

Last month the Competition Commission outlined their plans for an inquiry into the groceries sector (4) which is dominated by Tesco and the other major supermarkets. Tescopoly is asking that the Commission consider not just the damage caused to communities and suppliers in Britain but the low wages and poor working conditions at the ends of thousands of international supply chains in both the grocery and non-grocery sectors.

Tesco is now the second biggest clothing retailer thanks to its aggressive pricing which means that a garment from Tesco now costs half the high street average. Just as Britons spend one in eight of every retail pound at Tesco it is now estimated we buy one in every eight pieces of clothing there too. One of Tesco's main sources of cheap clothing is Bangladesh, a country whose garment industry is in turmoil as workers riot over poor pay and working conditions.

Martin Hearson, a spokesperson for Labour behind the Label said:

"In May this year a worker at a factory that supplied Tesco died protesting over pay. It is no surprise that these people are so desperate - as Tesco expands its sourcing from Bangladesh, garment sector wages have halved over the past decade and hundreds have been killed or injured due to poor health and safety. Bangladesh is only the tip of the iceberg of the exploitation caused by the low prices demanded by cut price retailers such as Tesco."

Other organisations have raised similar concerns about the impact of Tesco's buying power along international supply chains. Women Working Worldwide visited a Kenyan farm supplying roses to Tesco where workers are poorly paid, live in cramped conditions, often 4 or 5 to a room, and often arrive not knowing when they will be allowed to leave that evening. Buyers insist on phoning through orders in the morning for export on the same day, giving supervisors no time to warn workers how long they will be working for.

According to Kate Byron of Women Working Worldwide:

"Workers are having difficulty overcoming these problems, as union representation on flower farms in Kenya is very limited and workers fear being sacked if they organise or complain about working conditions."

Tesco is the biggest buyer of fruit from South Africa and research conducted by both Oxfam and ActionAid has exposed how the exploitation of a casual workforce mainly made up of women workers is being driven by the uncontrolled buying power of British supermarkets. In 2004, Oxfam found women working at high speed for low wages in unhealthy conditions (5) and in 2005, ActionAid similarly reported women receiving poverty wages, living in dismal housing and bearing the brunt of insecure employment (6); a situation that has not changed much a year after the research was published. And across the Atlantic, many banana workers in Costa Rica no longer receive a living wage as a result of supermarket buying practices (7).

This Friday, Tescopoly is calling for Company law reform which would make the supermarket giant accept responsibility for its social and environmental impacts.

Shareholders should be aware of these issues and be asking Tesco to put in place systems to ensure the price of the company's success (8) does not come at the expense of workers in developing countries The alliance is also demanding a legally binding Supermarket Code of Practice which will regulate supermarket treatment of suppliers at home and overseas.

Notes

1. www.labourbehindthelabel.org/images/pdf/low-cost-retailers-070706.pdf (PDF)

2. The Tescopoly Alliance includes GMB London, Friends of the Earth, War on Want, Women
Working Worldwide, Labour behind the Label, Banana Link, the National Group on Homeworking, The Small and Family Farms Alliance and nef (The New Economics Foundation).

The Tescopoly Alliance is calling for:

• A block on any new take-overs by Tesco or other major supermarkets.

• Stronger planning policies to protect local shops and High Streets.

• A legally binding supermarket code of practice to ensure that all farmers, at home and overseas, are treated fairly.

• An independent watchdog with teeth to protect the interests of consumers, farmers and small retailers.

• Rules to protect workers' rights at home and overseas.

3. The Tescopoly website - www.tescopoly.org - was launched a year ago and has received more than 2.5 million hits. This site now lists 55 local campaign groups from Cornwall to Inverness calling for a halt to Tesco's growth and negative impact on British communities.

Inverness has been referred to as a "Tesco Town" because Tesco have three out of the city's four supermarkets and take 51p out of every £1 spent on groceries. Tesco have applied for planning permission to build a fourth supermarket. (www.tescopoly.org)

4. www.competition-commission.org.uk/inquiries/ref2006/grocery/index.htm

5. www.oxfam.org.uk/what_we_do/issues/trade/trading_rights.htm

6. www.actionaid.org.uk/_content/documents/tesco_southafrica.pdf (PDF)

7.www.bananalink.org.uk/joomla/images/costa%20rica%20delegation% ¬
20report%20march%202004.pdf (PDF)
and
www.bananalink.org.uk/images//living%20wage%20study%20english%20final.pdf (PDF)

8. In 2006 Tesco announced record breaking £2.2 billion profits.

See also Friends of the Earth's report "If Tesco really wants to be green..."
www.foe.co.uk/resource/media_briefing/tesco_agm_2006.pdf (PDF)

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Published by Friends of the Earth Trust