Socialist Worker

Market chaos brings down Woolworths

by Simon Basketter
Issue No. 2130

Shoppers at Woolworths in south London earlier this week - bargain hunting or an odd form of solidarity? (Pic: http://www.guysmallman.com/» Guy Smallman )

Shoppers at Woolworths in south London earlier this week - bargain hunting or an odd form of solidarity? (Pic: » Guy Smallman)


The Woolworths in the Elephant and Castle shopping centre in south London is a depressing place at the best of times. But last week things got a whole lot worse for those working there.

The retailer went into administration last week, putting the jobs of 35,000 workers across 815 shops at risk.

As staff were gripped by uncertainty over their futures, it wasn’t the easiest time to work. One worker told Socialist Worker, “My heart isn’t in it. How can it be when no one high up is telling us what’s going on or what will happen to us?

“We’ve been told we will get paid until Christmas, but after that, who knows?”

While the columnists in the Sunday papers worried about the decline of pick ’n’ mix sweets and waxed lyrical about memories of buying their first record, the workers are left stranded.

And the collapse of Woolworths is having a knock-on effect on other sectors of the economy.

Already over 100 lorry drivers who deliver stock to Woolworths have been told they won’t have a job three days after Christmas.

Woolworths workers are now worrying about how they will survive.

As one worker put it, “Maybe with my girlfriend’s wages we could just about manage to pay the bills – but then there would be nothing left to put food on the table.

“I’ve been here two years but some have been here since they were in their 20s and now they are in their 50s and 60s. I’m not sure what they would do if they didn’t have their jobs.”

Retire

Another worker said, “I am due to retire next year and have planned every wage packet to make sure that I can carry on paying the bills.

“It wasn’t going to be much but I would be able to survive. Now that’s thrown out of the window.”

Woolworths stores were reportedly busy last weekend. Whether this was bargain hunting or an odd form of solidarity, it won’t save the company – we can’t shop our way out of a recession.

Woolworths got into trouble because of the logic of the market. It had a rotten level of debt built up when in 2001 it took out a leasehold arrangement that cost a fortune but made lots of cash for shareholders.

The company expanded to distribute CDs and DVDs to other retailers. But these shops used this stock to get people into their stores and sold the CDs and DVDs at a loss – precisely to undercut Woolworths.

And, crucially, credit insurance dried up. When large companies buy supplies from smaller ones, they do it on credit. To mitigate against the risk of the purchaser not paying up, the supplier can take out credit insurance.

As the recession grows and more firms can’t pay their bills, the insurance companies have found themselves paying out huge sums. So they have stopped offering insurance.

At least another 20,000 companies in Britain have had the same insurance cover withdrawn in the last month.

All of this had little to do with how much we spend on the high street. None of it had anything to do with the workers.

But now they have a month of uncertainty before becoming just another Woolworths creditor – less important to the administrator than the others.

As private equity vultures circle, workers will be looking for redundancy pay and wondering how much of their pension fund will be sold off in a rescue package.

Devastated

In the nearby Camberwell store a worker stood outside having a cigarette before starting work. She said, “I’m devastated. We knew things were bad but this has still come as a massive shock.

“I genuinely believed someone would ride to the rescue. I don’t even know if I’ll be here tomorrow. And nobody seems to know when the store will close its doors for the last time.”

The shop workers’ union Usdaw said it was sad at the collapse of the company. They offered, “We will be doing everything we can to communicate the situation to the staff as the situation unfolds.”

But this falls a long, long way short of an adequate response.


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Article information

News
Tue 2 Dec 2008, 18:43 GMT
Issue No. 2130
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