Commerce, like many other industries, experienced extensive change during the 1990s. Mergers and acquisitions (M&As) led to the emergence of huge global and regional retailers and wholesalers. Retail trade is increasingly international in scope; as national markets become steadily saturated, more and more businesses are looking for new opportunities to expand into less developed markets. New commercial legislation, the enlargement of the European Union and the deregulation of the world’s economies, together with the creation of large free trade areas, such as NAFTA, MERCOSUR, ASEAN, etc., are encouraging market globalization. The falling costs of communication and information systems are also facilitating the internationalization of retailing activities. Competitiveness is, similarly, an important driver for both the internationalization of businesses and M&A-driven sectoral consolidation. Although small and medium-scale enterprises still employ the majority of commerce workers, they are ceding ground to their bigger and more powerful - most often multinational - competitors. Mergers are primarily motivated by business considerations, and often take scant account of employment and labour issues. Not surprisingly therefore, post-merger restructuring tends to shift the bias towards capital, sometimes resulting in job shedding.

Different explanations have been advanced for the extraordinary merger waves affecting the global economy over the past few decades. Some academics note that in several other sectors the largest five companies account for over 50 per cent of global sales, underlining the fact that by this measure even Wal-Mart and other retailers have considerable growth potential. Retailers continue to pursue scale benefits, and the only realistic mode for substantial growth is through mergers and acquisitions. Merger waves have also been linked to changes in corporate governance and the increased size of the financial markets. Among the important effects of greater institutional ownership is that fund managers, who are often the key sellers of larger blocks of shares in takeover battles, are more interested in squeezing out higher returns and less loyal to incumbent management than individual investors. Without the large increase in pension assets, which concentrated financial power, it is less likely that there would have been a willingness and ability to support large multi-billion dollar takeovers. Managers, corporate boards, and institutional shareholders had, by the 1990s, come to accept market-driven restructuring, endorsing shareholder value and pursuing it with vigour. M&A proponents also argue that mergers improve efficiency, and that larger combined firms are able to pass some savings to consumers through lower prices or improved service. Wal-Mart, the sheer volume of whose purchases enables it to negotiate very favourable terms with its suppliers and thus to undercut its competitors on many of its consumer products, is another driver specific to commerce consolidation and standardization. Supermarket chains, which operate in an environment of very slim profit margins and high volume turnovers, are one of the retail segments that have been especially affected by "the Wal-Mart effect".

The ILO organized a Tripartite Meeting on the Employment Effects of Mergers and Acquisitions in Commerce from 7 to 11 April 2003, on the basis of a background report entitled Employment effects of mergers and acquisitions in commerce (pdf, 542k). The purpose of this Meeting was to: exchange experience on policies aimed at promoting positive employment outcomes of mergers and acquisitions in commerce; review approaches to increased social dialogue and mechanisms for bipartite consultations to avoid or minimize merger-related layoffs and erosion in employment and working conditions in the sector; and to identify best practice in managing downsizing related to mergers and acquisitions, where this became necessary.

Twenty-two Governments, 17 Employers and 20 Worker delegates attended the Meeting, as did a Government Observer, six Government advisers, 1 worker adviser, and observers 19 observers from intergovernmental organizations and non-governmental organizations. Participants exchanged views and experiences on the subject matter of the Meeting and unanimously adopted conclusions (pdf, 32k), including appropriate policy action to address identified issues of concern around the following general themes: general aspects of mergers and acquisitions; employment; working and employment conditions; social dialogue; and ILO action. A resolution (pdf, 11k) concerning future ILO activities in the sector was also unanimously adopted. A Note on the proceedings is also available in pdf format (254k)

Contact address for more information

Mr. John P. Sendanyoye
Industrial Specialist
International Labour Office
4 route des Morillons
CH-1211 GENEVA 22, Switzerland
Tel. +41 22 799 7897Fax +41 22 799 7046
E-mail: sendanyoye@ilo.org or sector@ilo.org