IKEA Exploiting American Workers

A new story in the LA Times details some disturbing allegations about a massive retailer: miserable working conditions, low wages, discrimination charges. Sounds like Walmart, but this time the accused is Ikea. Shocked? I was, a bit.

Ikea has pretty solid enviro cred. I've always been a fan of their no free bag policy at check out -- you either buy one of their reusable bags or bring your own. It's very European and ecologically awesome (as is their flat packing -- goodbye Styrofoam!). In fact, in 2007 David Roberts wrote for Grist that when it comes to the environment, Ikea has a "set of practices that puts every big U.S. retailer to shame." And he goes on, "From the wood in its products to the factory conditions of its suppliers to the energy efficiency of its distribution network, IKEA has outlined tough, progressive standards almost unheard of in the U.S."

Around the same time Roberts was writing about Ikea's forward-thinking environmental policies, the company was opening a plant in Danville, Virginia. According the the LA Times, the verdict on their labor practices is anything but ideal:

LA Times writer Nathaniel Popper reports:

Three years after the massive facility opened here, excitement has waned. Ikea is the target of racial discrimination complaints, a heated union-organizing battle and turnover from disgruntled employees.

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.

Yikes. A comparison of wages for Ikea workers in comparable plants in Sweden is eye-opening. Popper writes that the European minimum wage is $19 an hour and employees get a minimum of 5 weeks paid vacation. What do Virginia workers get at Ikea? Eight bucks to start and 12 days vacation, with 8 of them determined by Ikea. And, if that's not bad enough, apparently a third of the workers are temporary staff and make even less, with zero benefits.

So, what's a disgruntled worker to do -- especially in an area where good jobs are hard to come by? Organize, of course. And that's apparently what the Danville workers are attempting. But, Popper writes, "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. Workers said Swedwood officials required employees to attend meetings at which management discouraged union membership."

There seems to be a breakdown in the chain of command, because the head of the union for the Swedish factories says that Ikea workers are guaranteed the right to organize and most Swedes take full advantage of that. It's worth noting that Popper reports that the plant is run by mostly American managers, with only a few Swedes. Perhaps it's management? Perhaps the directive is coming from higher up and farther away?

But the problems don't end there, either. While the company made over 6 percent more in 2010 than 2009 for a grand total of 2.7 billion euros in profit last year, they cut back pay for some workers and eliminated scheduled raises.

And that's still not all. Popper writes, "Six African American employees have filed discrimination complaints with the Equal Employment Opportunity Commission, claiming that black workers at Swedwood's U.S. factory are assigned to the lowest-paying departments and to the least desirable third shift, from 11 p.m. to 7 a.m."

Since this story broke in the LA Times, other unflattering information has emerged about Ikea. The company is owned by the world's richest charitable organization -- Stichting Ingka Foundation (SIF) -- worth $36 billion in 2006, according to Think Progress. But a look at the math puts the "charitable" part in question. Paul Breer writes:

The net worth of SIF outstrips that of the Bill and Melinda Gates foundation -- valued at $33.5 billion in 2009, a full three years after SIF's conservative estimate of $36 billion. But its grant of only $1.7 million annually to the Lund Institute -- "barely a rounding error in the foundation's assets" -- shows that SIF, technically classified as a charity organization, is not about good deeds. As a comparison, the Bill and Melinda Gates Foundation dispersed $1.645 billion towards curing the diseases affecting the world's poor. Even more striking, the money SIF has acquired from IKEA, while in the tax haven Netherlands, is used "for investing long-term in order to build a reserve for securing the IKEA group, in case of any future capital requirements." Whereas, the grants from the Bill and Melinda Gates Foundation are used to "improve access to advances in global health and learning."

Clearly, Ikea is no golden child in the retail world. Let's hope their management -- whether they be Swedish or American -- takes some responsibility for working to improve labor conditions in Danville. But there's also a bigger story here than just Ikea (not to let them off the hook).

The crux of this is that we've thrown our own workers under the bus in the U.S., the way we've been doing around the globe to other people. As one employee says in the LA Times article, "It's ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico." We're now the place to make a buck because labor standards are so low.

The war on workers is not just confined to Virginia or the news-worthy Wisconsin. Nor is this far-reaching erosion of the middle class hardly new. As Arun Gupta wrote for the AlterNet recently, "This trend goes back more than 30 years to the savaging of private-sector unionism and the social welfare state combined with deregulation, reloaded militarism and tax breaks for the rich. The current attack on public-sector unions and the remnants of welfare is just the latest stage."

Gupta details the surge or right-wing ideology and its implications on our economic and social well-being. And as much as we like to point out the audacity of profit-hungry box stores to treat their workers with such little respect, we've done it to ourselves. We've allowed corporate executives to get richer while working men and woman are faced with stagnant wages, fewer job opportunities, rising health care costs and disappearing pension funds. As a nation, we've set the bar so low, companies like Ikea are tripping over it.



AlterNet / By Tara Lohan

Posted at April 11, 2011, 10:40am

Today's Top Stories