Woolworths seeks Fair Work order as cost of strike reaches $50m

Australia’s largest retailer has revealed the staggering cost of industrial action by the United Workers Union at its distribution centres.

Woolworths has lodged an application with Fair Work to stop striking workers from blocking access to its distribution centres in Victoria and NSW as the supermarket giant counts the cost of the workplace dispute.

Australia’s largest supermarket is seeking orders from Fair Work to prevent the United Workers Union (UWU) from stopping distributions from its centres, saying it is a breach of the good faith bargaining requirements of the Fair Work Act.

Woolworths says the cost of industrial action has set the supermarket back $50m. Picture: NewsWire / Gaye Gerard

”The application comes after the UWU refused to give any assurance of safe passage for team members seeking to return to work at our Melbourne south regional distribution centre yesterday and this morning,” Woolworths said in a statement.

On Tuesday, Woolworths Group said Australian food sales had fallen by $50m since the start of the industrial action. In August, Woolworths announced a $1.7bn profit and a special dividend of 40 cents per share for shareholders.

“Until the industrial action is resolved, a further impact to sales is expected. The full financial impact at this stage is unknown. It will be dependent on the duration and extent of the ongoing industrial action across the affected sites and the time taken to rebuild inventory ahead of the Christmas trading period,” Woolworths said in a statement to the ASX.

The dispute between the supermarket and UWU) members has disrupted work at several distribution centres, leading to a shortage of products at some stores.

The industrial action has been ongoing for 11 days, impacting four of the supermarket’s primary connect distribution centres – three in Victoria and one in NSW – and a Lineage partner site, leaving supermarket shelves empty across stores.

According to Woolworths, the industrial action has led to a shortage of everyday items, including nappies, toilet paper, bread, drinks and frozen goods coming from outlets in Victoria.

The UWU is taking action over failed negotiations that led to more than 1500 workers walking off the job indefinitely for better pay and working conditions.

A unionist on the picket line said the industrial action would “intensify” unless their demands were met.

Woolworths says its stores are running dry of key items due to the industrial action. Picture: NewsWire / Glen Campbell

While one union had endorsed a deal with Woolworths, they were still at the negotiating table with the UWU.

“There was no need for Monday’s disruption by the UWU,” a Woolworths spokesperson said.

“The majority of our team at the Melbourne south regional distribution centre want to return to work and be paid again.

“As long as they continue to block access to our site, our customers will continue to face shortages on shelves in Victoria.

“We call on the union to do the right thing and let us reopen this site.”

Business Council of Australia boss Bran Black has lashed the union for it’s “reckless behaviour,” and has shared fears the continued action could impact household Christmas shopping.

“The UWU’s reckless behaviour is already impacting the supply chain, and we don’t want to see that spread further and result in consumers missing items for Christmas,” he said.

The business lobby said the prolonged industrial action is harming Australia’s already ailing productivity rate, which hampers wage growth in the long run.

“Six in every seven jobs are created by private businesses, not unions, and we need to ensure workers, economic growth and our success as a nation are not unfairly held hostage by unions who want conflict,” he said.

“The BCA strongly advocates for higher wages, linked to productivity gains, which is the only way to ensure employees receive a sustainable real wage increase and get the benefit of being paidmore.”

Woolworths stock levels have started looking thin across parts of NSW, Victoria and the ACT as a result of the strikes.

Woolworths says the UWU is seeking pay increases at these sites in excess of 25 per cent over three years, materially above inflation, at a time when Woolworths Group is actively working to keep food and groceries affordable for customers facing ongoing cost-of-living pressures.

Woolworths says the industrial action will increase prices at the check-outs. NewsWire / Gaye Gerard

This is despite the ACCC alleging both Woolies and Coles supermarkets engaged in misleading conduct, hiking prices by at least 15 per cent before slapping them with promotional discount stickers at prices higher than before the hike.

The ACCC alleges Woolworths did this for 266 products in its Prices Dropped promotion over a period of 20 months.

Woolworths has previously denied these claims.

Australian Treasurer Jim Chalmers said the government was serious about stopping supermarkets from negatively impacting families and suppliers.

“We know that cost-of-living pressures are hitting Australians hardest at the checkout,” the Treasurer said.

“Our new mandatory code has strong penalties that tell the supermarkets we’re serious about getting a fair go for families and farmers.”

Assistant Minister for Competition, Charities and Treasury Andrew Leigh added that the enforcement measures would benefit shoppers as well as farmers and suppliers.

“We’re cracking down on supermarket misconduct because it will help shoppers at the register, and it will help farmers and suppliers at the negotiating table,” he said.

“Labor’s wide-ranging competition policy agenda is good for families and farmers. More competition means a more dynamic and competitive economy.”