Nestlé’s take on inflation

While in 2009 Peru’s accumulated inflation was close to six percent, this year the National Sole Workers’ Union of Nestlé Peru S.A. (SUNTRANEP), after exhausting the collective bargaining stage and appealing to the mediation of the Labor and Employment Promotion Ministry, was only able to wring a meager three-percent raise out of management. Negotiations for this year’s collective bargaining agreement are past the direct discussion stage and have once again moved on to the Labor Ministry’s mediation. One of the main obstacles to negotiations is the company’s unyielding position, as management refuses to grant any raise whatsoever, arguing that “there’s zero inflation” and that it’s just doing “what the market dictates.” In addition, management is also pushing to extend the term of the new collective bargaining agreement to three years, with a zero salary raise for this year and a one-percent raise for each of the following two years.

We’re going to forget for the time being that the company still owes its workers a three-percent increase to “recover” from the accumulated inflation corresponding to the previous agreement. The market argument is too ludicrous to even merit our attention. All that’s left, then, as management’s central argument for refusing to grant a raise is the “zero inflation” claim. But Nestlé Peru itself has taken care of refuting this argument, displaying once again a lack of finesse stemming from the obstinate arrogance that characterizes management.

In a colorful “Comunicación al colaborador” newsletter (undated as usual) the Procurement and Human Resources divisions announced that the canteen service would have to raise its prices by seven percent as of June 1^st. Does that mean there’s inflation, then? If inflation is zero when it comes to wage raises, why is the canteen service upping its prices?

Sticking their hands in the workers’ pockets

What is worse is that the food purchased for the canteen is paid in equal parts by both the company and the workers. So, supposing there really is no inflation, in the best of cases, the steeper prices at the canteen mean workers will now have to pay 57 percent while the company only pays 43 percent.

Faced with this situation, SUNTRANEP demanded an explanation from the company’s CEO for the unilateral decision of increasing canteen prices. The union also protested about the service provided by APC Corporación, the company that operates the canteen, as there are complaints over the service being too slow and the lack of variety and quality of the food served. The company has yet to respond.

The company’s decision constitutes a violation of the collective bargaining agreement currently in force, which in its 35^th clause establishes, among other things, that: “Both parties further agree to form committees to monitor canteen services and verify the correct operation thereof.” This means that the union is entitled to control how the workers’ money is spent, as is only logical and natural.

 
Nestlé’s lessons on nutrition

In a recent “Hello Nestlé”, CEO Carlos Velasco proudly announced that last Apr. 30 the company and the Ministry of Education had signed what they called an “Interinstitutional Cooperation Agreement” to promote nutrition awareness across the country. He went on to say that “this makes Nestlé a strategic partner of the Peruvian government in its efforts to eradicate malnutrition.” Sounds rather nice, doesn’t it? Too bad it clashes with the “Comunicación al colaborador” newsletter where the company featured the new prices that workers will have to pay for food services. Let’s take a look:

It’s a shame that the Peruvian government should resort to Nestlé for help on raising awareness on nutrition. If the prices the company has set at its factory canteens (for regular and economical lunches) are anything to go by, the nutrition awareness campaign would have to be summarized in the following sound piece of advice: “Eat whatever you can with what little money you have!” Peruvians should also understand the nutritional differences that, according to Nestlé, exist between an employee who eats at the Main Offices’ canteen and a worker who eats at the factory canteen. Outrageous!

Saving nickels and dimes

Another recent newsletter from Human Resources informs workers that “fruit supplies will be temporarily suspended”, explaining that “in line with the company’s austerity measures, we are renegotiating (sic) prices with all our suppliers”, while playing down the importance of this suspension with the argument that “less fruit is eaten in the winter season.”

We’re sure that Nestlé headquarters in Vevey, Switzerland are taking note of this huge savings measure, which will most certainly increase the value of the company’s shares. But what the newsletter doesn’t say is that this measure will only affect the Main Offices, as the decision to suspend fruit supplies to the factories had already been taken unilaterally over a year ago. Yet further proof that Nestlé believes white-collar employees need more nourishment than blue-collar workers.

This brings to mind another sage piece of advice that would fit nicely into Carlos Velasco’s pet campaign: “Hold off feeding your family until you can negotiate a better price.”

While SUNTRANEP should be commended for its prudent response to this onslaught of provocations, it’s getting to the point that the union’s prudence may be confused with weakness.