Pick n Pay has initiated a formal section 189A consultation process to overhaul its labour model, signalling a shift in how the retailer manages costs as part of its turnaround strategy.
While it is not intended to reduce the overall headcount, CEO Sean Summers confirmed employees may work fewer hours, and changes to long-standing conditions, including premium pay structures, are on the table.
This development places one of the country’s largest private sector workforces at the centre of a cost reset at a time of high unemployment and mounting pressure in the retail sector.
With more than 30,000 employees and 71.4% union representation, the outcome of the process could reshape working conditions in the business while also testing how far Pick n Pay can go in aligning labour costs with those of its competitors without triggering job losses or labour unrest.
The process, required under labour law when large-scale restructuring is contemplated, according to the Labour Guide, will see the company engage unions and affected employees on proposed changes to working hours, scheduling and benefits.
Section 189A consultations do not automatically lead to retrenchments, but they signal significant operational changes are being considered, with potential consequences for income security, working hours and workplace stability.
Summers said the retailer has for years carried labour costs “way, way, way above” market norms, describing it as a structural issue that has weighed on competitiveness.
“We were paying over the market norms of our opposition,” he said, adding the company had engaged unions on the issue for more than two years before moving to formal consultations.
“We can no longer continue to just talk about it. We have to bring some action to the table,” he said.
At the centre of the proposed changes is labour flexibility. Summers said the current model is misaligned with customer behaviour, with many experienced employees working weekday shifts while peak demand has shifted to nights and weekends.
“The real skilled people we have are not really there when customers are shopping.”
The consultation will examine guaranteed working hours, shift patterns and benefits, including arrangements that exceed industry norms. Summers said hourly wage rates would not be reduced but acknowledged overall earnings could be affected through changes in hours and benefits.
“Some of it will be working slightly fewer hours, but we will not reduce the rate per hour.“
He pointed to examples such as Sunday pay, where he said Pick n Pay pays double the hourly rate compared with the industry norm of time-and-a-half.
“Some of these things are no longer sustainable from a cost perspective.”
Despite the company’s stated intention to preserve jobs, Summers conceded outcomes cannot be guaranteed.
“It’s impossible to guarantee no worker is going to be retrenched in this process,” he said, adding the goal is to “maintain jobs” by restoring competitiveness.
“If we don’t get our cost structures correct, then there are really bad consequences as a result of that.”
Pick n Pay said the process will be facilitated through the Commission for Conciliation, Mediation and Arbitration and is expected to run for 60 days. During this period, the company and unions, including the South African Commercial, Catering and Allied Workers Union, will engage on alternatives to retrenchments and ways to minimise the impact of the proposed changes.
Pick n Pay’s latest annual report highlights labour-related challenges as a key risk, including “escalating employee costs” and the potential for “labour unrest or declining morale”.
The group said its ability to attract and retain skilled workers is critical to long-term success, while also warning cost pressures and capacity constraints could weaken operational performance.
Employees, the report said, prioritise “fair and competitive pay”, “job security” and “work-life balance”, alongside clear communication during times of change.
At the same time, the company has committed to building a “future-fit” business by reducing structural costs and improving efficiency in shops, supply chain and support functions.
The labour reset comes after earlier turnaround measures, including shop closures, support office restructuring and a salary freeze in non-shop operations.
The group has also completed a recapitalisation and listed its fast-growing discount chain Boxer to reduce debt while narrowing losses in its core supermarket business.
However, the turnaround remains incomplete. Pick n Pay has recently pushed out its break-even target to 2028, highlighting the scale of the challenge ahead as it seeks to restore profitability in a highly competitive retail market where rivals continue to expand, Business Day previously reported.
Summers warned failure to implement the labour changes would further delay recovery.
“Profitability would be further impacted, and it would delay the turnaround even longer,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.