Workers stage Japan’s first strike in decades over supermarket sales

  • The strike is the first by a Japanese supermarket in 61 years
  • The union is protesting the sale of Sogo & Seibu’s unit to a US fund
  • Seven & i announces unit sale on September 1st to Fortress
  • The value of the unit was reduced by $205 million

TOKYO (Reuters) – Workers at a Tokyo supermarket went on strike on Thursday after talks broke down with management over a planned sale of their company, the country’s first major strike in decades.

About 900 workers at the Seibu flagship store in the busy Ikebukuro district are protesting the sale of Sogo & Seibu, a unit of Japanese retail giant Seven & i (3382.T), to the US Fortress Investment Group.

They are looking for guarantees of business and business continuity, unhappy with the announced plans of electronics retailer Yodobashi Holdings to take over nearly half of the store.

Critics, including Ikebukuro officials, say such a change would lower Seibu’s image by replacing the store’s many individual stores.

The deal will close on Friday, Seven & i said, adding that it had reduced the sale value of Sogo & Seibu by 30 billion yen ($205 million) from the originally agreed value of 250 billion yen after Fortress requested that it give “maximum consideration to the continuation of the business.” Sogo & Seibu and Continued Employment”.

Seven and I will also forgo 91.6 billion yen of debt, or more than half the amount it lent to its unit, as part of the deal.

In a statement, Fortress said it will work with Seven & i to support Sogo & Seibu management to maintain its workforce “to the greatest extent possible.” She said she plans to invest more than 20 billion yen with partner Yodobashi to renovate Sogo & Seibu stores.

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Strikes are extremely rare in Japan, where negotiations over wages and working conditions are usually agreed upon amicably. The one-day strike – the first at a Japanese supermarket in 61 years – follows months of negotiations between Sogo & Seibu management and the trade union, and comes amid an acute labor shortage in Japan.

On Thursday morning, Cebu workers protested in front of the store in the summer heat while members of various other unions handed out flyers to show their support.

Seven & I apologized for the strike and said the subsidiary would continue to hold talks with the union. Other Cebu and Sogo stores were open for business as usual.

“I regret that we were not able to change the outcome, but the truth is that our business is suffering as well,” union leader Yasuhiro Teraoka told reporters after announcing the sale.

“Maybe it was our failure not to raise our voices yet…but I think having so many people see and hear what we had to say made it an event.”

Buyer’s responsibility

The strike comes amid a very tight labor market in Japan, where workers at major firms won the biggest pay rises in three decades in labor negotiations this spring. But these gains were eroded by inflation, which reached a 41-year high, and wages in real terms continued to fall.

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The Sogo & Seibu workers gained the support of labor groups from competing supermarkets including Takashimaya and Isetan Mitsukoshi (3099.T).

“I think many workers got some encouragement from this issue,” said Wakana Shoto, a professor at Rikkyo University who specializes in labor issues. “Considering the difficulties faced by the industry, the conditions in Sogo and Cebu are not unique.”

Seibu Ikebukuro is Japan’s third largest department store by sales, according to media reports, but owner Sogo & Seibu has been in the red for the past four years.

Stephen Givens, a Tokyo-based corporate lawyer, said that for offshore funds looking to restructure Japanese brands, the withdrawal raises the specter of similar hurdles.

“You can take over a Japanese company, as a foreigner, through brute force, and it won’t do you any good if the people who actually run the Japanese company and work for the Japanese company are not happy with the results.” He said.

“This is one of the cautions that all potential foreign acquirers should keep in mind.”

($1 = 145.9200 yen)

(Reporting by Retsuko Shimizu, Mariko Katsumura, Kaori Kaneko and Rocky Swift; Reporting by Mohamed for the Arabic Bulletin) Writing by Chang Ran Kim. Editing by Edwina Gibbs, Stephen Coates, and Miral Fahmy

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