Workers Strike at Major Tokyo Department Store Over Sale to US Fund
Union workers at Sogo & Seibu, a major department store in Tokyo, went on strike on August 31, 2023, following a breakdown in negotiations regarding the planned sale of their company. This marks the first significant industrial action in Japan in decades.
Around 900 employees at the Seibu flagship store in Ikebukuro are protesting against the [sale](https://www.reuters.com/markets/deals/japans-seven-i-holdings-sell-sogo-seibu-unit-fortress-sources-2022-11-11/) of Sogo & Seibu to U.S. fund Fortress Investment Group. Sogo & Seibu is a unit of Japanese retail giant Seven & i [(3382.T)](https://www.reuters.com/markets/companies/3382.T). The workers are demanding guarantees for job and business continuity, expressing dissatisfaction with the reported plans of discount electronics retailer Yodobashi Holdings to take over approximately half of the store.
Critics, including officials in Ikebukuro, believe that such a change would degrade Seibu’s image by replacing many individual boutiques in the store. The deal is set to close on Friday, with Seven & i announcing that it had reduced Sogo & Seibu’s sale value by 30 billion yen ($205 million) from the originally agreed 250 billion yen. This decision was made after requesting Fortress to give “maximum consideration of Sogo & Seibu’s business continuation and continuation of employment.”
Labour Struggles Amid Tight Market Conditions
Strikes are relatively rare in Japan, where wage and work condition negotiations are usually settled amicably. This one-day strike, the first at a major Japanese department store in 61 years, comes at a time of acute labour shortages in Japan. It follows months of negotiations between Sogo & Seibu management and the workers’ union.
In a statement, Fortress said it would work with Seven & i to support Sogo & Seibu’s management in maintaining its workforce “to the extent possible”. It also announced plans to invest more than 20 billion yen with partner Yodobashi to renovate Sogo & Seibu’s stores.
The ongoing labour market tightness in Japan has seen workers at major companies secure the largest wage increases in three decades during [labour negotiations](https://www.reuters.com/markets/asia/japan-regular-wages-jump-most-since-1995-after-labour-talks-2023-07-06/) this spring. However, these gains have been [eroded](https://www.reuters.com/markets/asia/japan-fiscal-2022-real-wages-fall-most-8-years-inflation-bites-2023-05-23/) by inflation at a 41-year high, leading to a continued fall in real wages.
Implications for Overseas Funds
The strike raises potential issues for overseas funds looking to restructure Japan Inc brands. Tokyo-based corporate lawyer Stephen Givens warned, “You can acquire a Japanese company, as a foreigner, through brute force, and it’s not going to do you any good if the people who are actually managing the Japanese company and working for the Japanese company aren’t happy with results.”
Givens emphasised that this is a “caveat emptor” situation that all foreign would-be acquirers should keep in mind.
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Original Story at www.reuters.com – 2023-08-31 08:34:45
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