Not All in This Together: How Covid has driven up inequality in Supermarket Supply Chains

July 20, 2021

     By Duncan Green     

I was speaking on a UN panel on Decent Work last week, so thought I’d better catch up with the latest Oxfam report, Not in This Together, written by Anouk Franck and Art Prapha. It provides a great case study of Covid as an ‘engine of inequality’ (and of how to write a research-based advocacy report – killer facts galore, everything referenced, good graphics, proper exec sum etc etc).

The paper builds on the big investment we’ve made in recent years in researching and working with, on and occasionally against, big supermarket chains. That’s proved useful because the supermarket sector has been one of the standout winners of the pandemic – food and clothes shopping, in person and increasingly online, has boomed.

So, the report asks, who has/hasn’t benefited from the supermarket boom? Some excerpts:

‘COVID-19 has cost global workers $3.7 trillion in lost income, and women and young workers have been hardest hit… In contrast, the supermarket sector has largely been the standout winner of the crisis. Senior executives, the largest institutional investors, and mostly wealthy shareholders of global supermarkets continue to be rewarded with ‘business-as-usual’ high compensation and dividends. In fact, during the pandemic, publicly listed supermarkets distributed 98% of net profits to their shareholders via dividends and share buybacks. Meanwhile, workers and producers, especially women, across the globe – the people we call ‘essential’ or ‘frontline’ workers – have seen their incomes stagnate or even fall, while their rights continue to be violated.

Oxfam’s analysis of the global supermarkets ranked in its Supermarket Scorecard found that inequality is being exacerbated by COVID-19, with a huge human cost:

• Like-for-like food sales, excluding fuel, across listed retailers grew by 11.1% on average during the second to fourth quarter of 2020, up from just 1.6% sales growth in the same period in 2019. Non-listed retailers, such as Aldi North, Aldi South and Lidl, recorded an overall 8.5% increase in sales in 2020. Jumbo’s sales growth amounted to 11% for 2020 while PLUS reported a 14% sales increase.

• The selected listed food retailers have seen share values skyrocket. Their market capitalization increased by $101bn (between March and December 2020), compared to an increase of $75bn in 2019.

• Between 2019 and 2020, total dividends distributed to shareholders increased by 123%, from about $10bn to $22.3bn.

• Owners of non-listed supermarkets, such as the Albrechts (owners of Aldi North and Aldi South) and Dieter Schwarz, owner of the Schwarz Group (consisting of Lidl and Kaufland), have seen their wealth increase by 37% and 30% respectively, in less than a year.

Costs related to COVID-19 reported by the supermarkets pale in comparison to their additional revenues gained and increased shareholder payouts during the pandemic. Few have taken the opportunity to invest in longer-term supply chain improvements to benefit the food producers and workers experiencing extreme hardship due to the pandemic.

In 2018, it would have taken a woman worker processing shrimp at a typical plant in Thailand more than 4,000 years to earn what the chief executive of a top US supermarket earned on average, in a year. In 2020, it would have taken her more than 5,700 years.

Oxfam’s new research highlights critical issues that supermarkets must address:

• Violation of workers’ rights is evident across multiple food supply chains in different regions. Between November 2020 and February 2021 Oxfam conducted new research on working conditions in the production of coffee in Brazil, basmati rice in Pakistan and wine in South Africa, and updated earlier research on Assam tea production in India and seafood production in Thailand. Most workers and farmers interviewed by Oxfam and partners do not earn a living income or wage, and some do not even earn a monthly minimum wage. In Brazilian coffee production, slavery-like working conditions reported on Brazil’s official Dirty List to combat modern slavery could be linked to many supermarkets’ supply chains.

• The extractive business model continues, as does the unfair distribution of value across supermarkets’ high-risk supply chains. Between 2005 and 2019, workers’ share of the end consumer price was consistently very low for wine (around 1%), tea (between 0.7% and 3%) and shrimp (less than 1%); it had declined for coffee since 2010, and was highly volatile for rice. Due to endemic structural inequalities, the share received by women workers was even smaller.

• Women’s rights violations in supermarket supply chains are pervasive and systemic. COVID-19 has exacerbated existing structural gender inequalities and made the situation even more dire for women workers and farmers. Oxfam’s research reveals evidence that women workers – who were already earning less – have lost more income than men during the pandemic. Women workers have effectively acted as shock absorbers during the pandemic and will end up worse off, while at the other end of the supply chain, companies and shareholders have continued to prosper. Until now, supermarkets have failed to take adequate action to address the abuse of labour rights experienced by women in supply chains. Transparency is greatly lacking: of the retailers featuring in Oxfam’s global Supermarket Scorecard, only Tesco has published a gender policy detailing the actions it will take to improve the position of women in four high-risk supply chains. None of the supermarkets are tracking and disclosing gender-disaggregated data.’

Early on in the pandemic, UN Secretary General Antonio Guterres came up with a brilliant metaphor: ‘COVID-19 has been likened to an x-ray, revealing fractures in the fragile skeleton of the societies we have built.’ The Oxfam report adds more, painful, detail to the X-ray.

July 20, 2021
Duncan Green