From Socialist Voice, October 2006

The logic of accumulation: Evidence from the retail industry

The introduction of radio-frequency identification (RFID) technology as a replacement for bar-codes on retail products is being praised by employers as a factor in increased productivity in the retail industry. Consumers will be able to trace the origin of the food they buy, thanks to RFID tags—computer chips equipped with miniature antennae—thus allowing for greater product information than is possible with the existing bar-codes scheme.
     Yet the effect of such technological and structural change in the retail industry is not all benign and is likely to have an impact on the levels and quality of employment.
     RFID is the latest strategy on the part of retail employers for increasing productivity and competitiveness. The technology makes possible “non-line-of-sight transmission,” by means of a radio signal, so eliminating the need for a scanner (and therefore an operator) to read a bar-code. It will also allow for including additional information about a product, such as the manufacturer, expiry date, and weight.
     It can also facilitate food safety management through an enhanced ability to trace livestock, to fight counterfeiting, to speed up point-of-sale payments, and to improve stock control and a host of other functions.
     Large retail monopolies already see clear benefits to the adoption of RFID. The Metro Group, a giant European retail conglomerate, has already tested the technology and found that it can lead to reductions in warehouse costs, loss of merchandise, and out-of-stock problems.
     Driving such developments, however, are the central dynamics of the capitalist system. Under this system the motive force for employers is the pursuit of profit. The reproduction of capital, and employers’ insatiable desire to appropriate profit, results in the constant effort to expand and improve production. Moreover, competition compels each employer—under threat of going out of business—to improve technology and expand production. To halt the growth of technology and the expansion of production would be to drop behind; and those who drop behind fall prey to competitors.
     Not all employers can keep up with the race. Competition forces each one to attempt to reduce the price of their commodities; but ultimately only big monopolies can achieve the necessary economies of scale. Small ones that cannot stand up to the efficiency of the monopoly giants either go out of business or are taken over by them. For example, the evidently high costs of RFID will preclude all but the largest retailers from employing the technology.
     Wal-Mart alone has invested $3 billion over several years in the new technology, because it estimates that the eventual savings will be immense. It has predicted annual savings of up to $8.35 billion with RFID.
     John Sendanyoye, an expert on the retail sector with the International Labour Organisation, has observed that the cost of implementing RFID will be roughly $340–380 million for a business with approximately eight distribution centres and a thousand or more branches, making it prohibitive for all but the large monopolies.
     But the impact of these developments is not exclusive to capital: labour is itself placed under pressure. A typical feature of the capital accumulation process and the expansion of production is an associated increase in the mass of raw materials, machinery, technology and other instruments drawn in to the production process (compared with the amount of labour used). The relative decrease of labour in the production process as a whole can result in workers becoming surplus to the requirements of the accumulation of capital and so adding to the ranks of the unemployed.
     The Metro Group, for instance, has acknowledged that the introduction of RFID throughout the company’s operations is likely to eliminate many routine warehousing tasks, thus “rendering thousands of jobs superfluous.” Indeed a similar impact of this technology has been noted elsewhere. In Britain the introduction of RFID technology in the National Health Service could result in more redundancies as a result of the removal of administrative burdens, as automation will inevitably lead to a reduction in the number of administrative workers. In the United States some observers have suggested that the introduction of RFID will affect four million employees. The impact of such redundancies, however, may well be mediated by the gentle pace of introduction of the new technology.
     There is nothing inevitable, however, about such processes. The unions in Germany have tackled Metro on RFID, and there is no reason why workers organised in unions elsewhere should not be prepared to challenge the employers’ strategies on this issue—particularly with the potential impact of the new technology on employment.
     With the increasing domination of the Irish retail market by global corporations, such as Tesco, Sainsbury’s, Marks and Spencer, and other multiples, and the monopolisation of the wholesale business, Irish workers and their unions are going to face a severe test over the next few years.
     If the retailers get their way we will see more and more part-time workers with pay just about meeting the minimum requirement. It will also put further strain on small family-run businesses and push more and more of them out of business.
     These developments show once again that capitalism does not create competition but rather monopolies. Irish consumers and Irish workers will pay the price, in higher food prices and job losses. These will have a disproportionate impact on women workers, who make up the greater number of workers in the retail trade. The whole question of the retraining of workers displaced by new technology also needs to be seriously addressed.
[NC]

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