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Mon, Apr 13, 2009 - Page 10 News List

Courts scrutinizing German discounter Kik's labor practices

AFP , FRANKFURT, GERMANY

Saleswomen paid 5 euros (US$6.6) an hour, Asian subcontractors with dubious practices and counters in the shape of swastikas — in Germany the success of textile discounter Kik has kicked up a storm.

The latest example: A court in the western city of Hamm recently ruled as “indecent” the salaries paid to saleswomen Martina K, 47, and Ursula Grunwald, 62, who received 5.20 euros per hour.

Kik will have to pay them between 8,900 euros and 10,500 euros in back pay and raise their salaries to 8.21 euros an hour.

In all, 3,500 Kik workers in Germany, of a total 15,000 worldwide, are paid 5 euros per hour and receive the strict minimum in state health and pension benefits, services trade union Verdi said.

“Our workers might have to do more than others, but in exchange they have a secure job,” the co-founder of Kik, Stefan Heinig, told German media.

Heinig has a reputation of an obsessive cost-cutter. In his 2,700 stores, the decoration is minimal and there is no music and no air conditioning.

Kik, a German acronym for “client is king,” deals with low cost suppliers, including many in Asia, and changes them often if needed. Goods arrive directly at a center in Boenen, western Germany, and there are no middlemen.

Kik’s prices are therefore hard to beat. In a Frankfurt store, goods are piled high or are still in boxes and customers can find a pair of kids’ jeans for 2.99 euros or a military print T-shirt for 3.99 euros.

A small black and white cotton dress, the origin of which could not be determined, cost 4.99 euros.

In nearly 15 years of activity, Kik, which is majority owned by the German distributor Tengelmann, has steadily gained market share and posted sales of 1.4 billion euros last year.

In Germany or in eastern Europe, where the company is expanding, the group targets families with kids, “thrifty people and socially weak people,” its Internet site said.

Heinig was asked by the German daily Die Welt in 2007 about his models and replied: “I call them McAlKea. McDonalds, Aldi and Ikea are model businesses for me.”

Aldi is a hard-discount German supermarket chain.

Like those companies, however, Kik’s social policies are criticized by unions and non-governmental organizations.

In Germany there is no works committee, a spokeswoman confirmed, while one attempt in Austria ended up in court.

Testimony provided by Verdi member Henrike Greven showed staff were watched closely, their bags and even their cars were regularly inspected. The management has also hung posters urging workers to turn in others who steal.

At suppliers, such as in Bangladesh, clothing sewers must sometimes work seven days a week at jobs that do not pay a living wage. Some are said to employ children.

Kik rejects charges by antifascist Internet sites which call it “a Nazi store.”

In 2007, clients were shocked to find counters were shaped like swastikas, a symbol used by Nazis and which could be seen in Frankfurt.

“It is a completely normal presentation in retail,” a spokeswoman said.

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