Last updated: May 14, 2013 7:12 pm

Amazon hit by old-world strike action

Amazon, the leading light in the world of ecommerce, has been hit by the distinctly old-world malaise of industrial action, as hundreds of its German warehouse staff walked out on strike.

The one-day stoppage on Tuesday in pursuit of higher pay is the largest such action to affect the US retailer, which prides itself on the efficient delivery of its packages.

The company is being challenged by the Verdi union over its refusal to join a collective bargaining agreement for Germany’s retail sector.

About 500 of 2,000 workers at Amazon’s warehouse in Leipzig took part in the strike, according to a Verdi negotiator, while several hundred more joined in Bad Hersfeld, where two Amazon warehouses employ 3,300. The retailer has 9,000 staff at eight German warehouses.

Germany is the largest non-US market for Amazon, with sales rising 20 per cent to $8.7bn last year.

Verdi wants Amazon to pay German employees according to terms agreed with other mail-order retailers, whereas Amazon says its staff are logistics workers and are well-paid according to the norms of that sector.

As online shopping booms, criticism of warehouse working conditions has spread from the US to Europe, hardening into the most persistent reputational challenge faced by Amazon.

The retailer fired a security company after a German television documentary this year showed security guards allegedly mistreating foreign seasonal staff.

Warehouses have become crucial to winning the competition for online shoppers. The flip side of the low prices and fast delivery speeds demanded by consumers are high-tech distribution systems with steep productivity targets for workers and real-time monitoring of performance.

Unions in Germany have historically been able to exert influence to agree sector-wide pay deals but this tradition has been undermined by the rise of the more informal working arrangements and part-time jobs spurred by labour reforms a decade ago.

Verdi complained that no agreements on pay had been struck for any Amazon warehouses, while pay was lower than at similar companies. “It is unacceptable that no wage agreement applies for Amazon, as the largest online retailer,” the union said.

“Labour conditions should be negotiated between the union and the employer,” said Jörg Lauenroth-Mago, a Verdi representative. He said Amazon’s employees had to work under “extreme pressure”.

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Amazon said it made “no sense” for Verdi to demand retail sector wages. “Amazon’s warehouses are logistics companies, fulfilling customer orders” including for third-party retailers, the company’s German office said.

“Over the past months we have had a series of informal talks with Verdi. Although we are prepared to continue these talks, we do not see any joint basis for negotiations at the moment.”

Amazon said that more than 80 per cent of employees at the affected warehouses worked as normal and that deliveries were not disrupted.

Lisa Byfield-Green, an analyst at Planet Retail, a consultancy in London, said: “Amazon will not have been harmed by a one-day strike and I would not expect them to make concessions at this stage but there is the possibility that this action could continue and that could start to have a significant impact on the company.

“Amazon is facing some reputational issues in Europe at the moment, which could be a challenge especially when growth in Europe, while still strong, is showing signs of slowing. It needs to make sure it maintains its image with customers and Germany is a very important market.”

Last year Amazon acquired a group that makes warehouse robots called Kiva Systems but it has sidestepped questions on how this will affect its need for labour.

Starting hourly wages in Leipzig of €9.30 compared with an agreed rate for the mail order retail sector of €10.66, Verdi said, while in Bad Hersfeld the Amazon entry rate of €9.83 compared with an agreed sector rate of €12.18.

Germany’s economy has weathered the crisis in the eurozone remarkably well, with unemployment close to record lows for the era after the country’s unification and Amazon says it created 3,000 jobs in Germany over the past year.

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