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April 17, 2011

Lessons from the IKEA story

Some of you may have heard about the dissatisfaction at the way that IKEA is treating workers at its US plant in Danville, Virginia. This was unexpected since the Swedish firm has a reputation as "a good employer and solid corporate citizen" back in its home country.

Workers complain of eliminated raises, a frenzied pace and mandatory overtime. Several said it's common to find out on Friday evening that they'll have to pull a weekend shift, with disciplinary action for those who can't or don't show up.

Some of the Virginia plant's 335 workers are trying to form a union. The International Assn. of Machinists and Aerospace Workers said a majority of eligible employees had signed cards expressing interest.

In response, the factory — part of Ikea's manufacturing subsidiary, Swedwood — hired the law firm Jackson Lewis, which has made its reputation keeping unions out of companies.

The dust-up has garnered little attention in the U.S. But it's front-page news in Sweden, where much of the labor force is unionized and Ikea is a cherished institution. Per-Olaf Sjoo, the head of the Swedish union in Swedwood factories, said he was baffled by the friction in Danville. Ikea's code of conduct, known as IWAY, guarantees workers the right to organize and stipulates that all overtime be voluntary.

So why is it that a company that has a sterling reputation in Sweden transforms into an abusive employer when it operates in the US?

Laborers in Swedwood plants in Sweden produce bookcases and tables similar to those manufactured in Danville. The big difference is that the Europeans enjoy a minimum wage of about $19 an hour and a government-mandated five weeks of paid vacation. Full-time employees in Danville start at $8 an hour with 12 vacation days — eight of them on dates determined by the company.

What's more, as many as one-third of the workers at the Danville plant have been drawn from local temporary-staffing agencies. These workers receive even lower wages and no benefits, employees said.

Swedwood's Steen said the company is reducing the number of temps, but she acknowledged the pay gap between factories in Europe and the U.S. "That is related to the standard of living and general conditions in the different countries," Steen said.

Bill Street, who has tried to organize the Danville workers for the machinists union, said Ikea was taking advantage of the weaker protections afforded to U.S. workers.

"It's ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico," Street said. [My italics]

This should really come as no surprise. What keeps companies from abusing their workers is not some mystical corporate ethic or the benevolence of the bosses. That may be true in small businesses where there is a personal relationship between the owners and all the workers. In large businesses and corporations the workers are simply cogs in a machine or statistics in a spreadsheet and there the driving principle of is simple: maximize profits. That's it. And they will do whatever it takes to achieve that.

The only things that prevent abusive practices are strong unions coupled with strong laws that protect people and maintain national standards. As the US continues to eliminate those safeguards, its workers will be increasingly treated even worse and there will come a time when being treated like Mexican workers will be seen as the good old days.

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Comments

Just curious why this is only happening in US and not in Canada.

But thank you for sharing that information.

Posted by Gonza on April 17, 2011 06:08 PM

Let's include "academic institutions" to the sentence, "In large businesses and corporations ..."

Below certain levels, workers at major academic institutions also experience themselves as cogs in the machine. Many are incredibly unhappy and unmotivated, working under incompetent bosses and insane hierarchy structures.

Posted by Harry on April 18, 2011 08:16 AM

Shalom Mano,

This is one more example of what I thought of as an important campaign promise made by now President Barack Hussein Obama -- to support the Employee Free Choice Act -- that he has abandoned.

B'shalom,

Jeff

Posted by Jeff Hess on April 18, 2011 08:38 AM

That minimum wage in Europe is ridiculous, no wonder the workers there are satisfied. The sad part is that this article is all true, and in order to protect our workers unions are one of the best ways to do so. Hopefully it won't get to the point that the rest of the world looks at the US like that.

Posted by David on April 22, 2011 01:16 PM

I could not agree with you more and I ditto Davids response as well. The only thing preventing abusive practices are strong unions coupled with strong laws that protect people and maintain national standards and freedom. Well stated Shalom!

Posted by Seth Helgeson on May 1, 2011 09:46 PM