News that workers at more than a dozen No Frills stores in Ontario could go on strike if wage demands are not met is becoming a common reality in Canada. The waves of social action that have dominated headlines at grocery chains across Canada in recent months continue to dominate the headlines while supermarket CEOs, enjoying bumper quarterly profits, still blame “supply chain” issues to be behind soaring food prices.
It’s not as if warehouse workers and cashiers get a share of these profits: Their paychecks are shrinking because of inflated prices and many say they “can’t afford to shop.” in the same grocery aisles they stock. Bargaining victories certainly encourage unionized grocery store workers to send strike notices to get the goods, but this renewed activism is about more than just fair wages. A strong union movement is more necessary than ever to fight against the financialization of the grocery sector.
A new report from the Broadbent Institute titled Profitability of Canadian food products: inflation, wages and financialization seeks to understand how we got to this point and examines how the financialization (the process by which business elites gain greater control over economic policy) of the food retail sector has driven up prices in the shelves while suppressing salaries.
According to economist Isabella Weber, who popularized the framework of “seller’s inflation,” a more nuanced illustration of what others have called “greed,” big companies are taking advantage of the opportunity of economic shocks such as pandemic lockdowns and other geopolitical events to coordinate the entire industry. price increases. These price increases may be more anticipated than reacting to actual changes in supply or demand, and ultimately result in increased profits. Applied to the Canadian food industry, CEOs who highlight anticipated supply issues in their record profit reports certainly fit that mold. Meanwhile, the same grocery store CEOs were fined a measly $50 million earlier this year after competition investigators found they were fixing the price of bread.
Weber’s seller’s inflation also includes a “conflict stage” in which “workers respond by trying to push back against real wage cuts.” While some continue to propagate the myth of the wage-price spiral against worker pressure for fairer wages, the opposite dynamic appears to be occurring here, albeit without the pricing power that workers have relative to their employers. However, to protect their new profit levels after the price hike, the corporate grocery sector is incentivized to resist wage increases, introduce more control and automation in retail stores, or simply to increase prices further.
The financialization of the Canadian food industry
Much of the impetus behind this drive for profits is influenced by the financialized shareholding framework that governs the highly concentrated supermarket sector. The incredible market concentration in the sector does not exactly make the chains uncompetitive on price: the correlation between competition and concentration is ambiguous, to say the least. With their market power, it is a competition for profits rather than prices.
Global investment firms hold significant stakes in all major Canadian grocery chains, so significant profit-maximizing incentives are built into corporate structures. While the federal government puts on a show calling for more competition in the retail sector by reducing concentration, it doesn’t exactly address the issues the grocery sector is competing for. Like the much more diluted housing market which has also seen incredible price rises, without tackling financialization it is difficult to see how the government’s weak prescription for food inflation – demanding that chains offer more discounts and price freezes to stabilize costs – will keep prices low. , let alone help workers’ wages keep up.
Canada’s real and worsening food insecurity crisis requires solutions that go beyond asking grocery store CEOs to temporarily freeze prices. Policies including windfall profits taxes, price controls, and even city-owned grocery stores (as is proposed in Chicago) would go a long way toward improving food security while supporting workers’ enduring struggle for better wages and better working conditions.
Clement Nocos is the Director of Policy and Stakeholder Relations at the Broadbent Institute. He is also editor-in-chief of the new journal Perspectives.
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