IKEA’s Genius Plan: Pay Workers More to Keep Them
Faced with sky-high turnover, notoriously anti-union IKEA has reluctantly decided to pay workers more and offer them childcare in a tight labor market. To rebalance power between management and labor in the long term, workers need a union.
A sign for an Ikea furniture store is seen on February 26, 2024, in Round Rock, Texas. (Brandon Bell / Getty Images)
Global retail giant IKEA was having trouble keeping its employees. It’s quit rate in the wake of the pandemic crept above 20 percent as unhappy workers — underpaid, facing unpredictable shift hours, and dealing with the misery of retail — left by the tens of thousands each year. The labor losses hit the furniture giant hard.
As Matthew Boyle reports for Bloomberg, each departure cost the company $5,000, the cost of hiring someone new, which incentivized IKEA to do something about their worker retention problem. One would hope that the misery suffered by its employees would be a good reason to improve their lot, but, alas, that wasn’t enough. Repeated hits to the bottom line did it, though. With sixty-two thousand workers leaving each year at five grand a pop, that’s a lot of meatballs — $310 million worth, in fact.
IKEA’s solution was to pay some of its workers better and offer better working conditions with more predictable shifts and benefits that include subsidized childcare. It’s like a doctor telling you about a miracle cure to your nasty bacterial infection: antibiotics. That is to say that the solution was to adopt obvious, repeatedly proven solutions to a common problem. So why don’t we see this approach everywhere, all the time?
You Want Nice Things? Join a Union.
As a rule, workers don’t enjoy labor wins thanks to the beneficence of their employer. They win concessions through class struggle in one form or another. In this case, IKEA has fought unionization, knowing full well that shifting the balance of power a bit toward workers would undermine its power over its employees. It was even called out by a union coalition.
As Boyle notes, “After several years of talks between the union coalition and IKEA, the company last year agreed in principle to let workers organize and allow store access to union representatives. Notably, though, the parties couldn’t come to terms on allowing labor reps to enter US stores.”
For years, IKEA employees, like so many of their compatriots, were stuck in a position of weakness. More recently, even without a union, workers have had the benefit of a tighter labor market and have been willing to walk away from a bad deal. This shift in the power dynamic between owners and workers has created effects similar to what a union might achieve through organizing — a slight balancing of power. It’s a welcome change in the short run but it poses long-term risks to any gains won while employees enjoy a slight advantage over bosses.
Companies Are Fickle Beasts
What companies give, they can — and will — take away when it suits them. As the saying goes, “Buy cheap, sell dear.” One of the inputs that bosses want to buy for cheap is labor. Marx knew this to be true and understood why. A kind boss, to the extent such a person can exist, he argued, can’t keep up with an unkind one — which is to say, his competitors. And there will always be competitors. Without state regulation, capitalism will drive down wages, produce poor working conditions, and immiserate workers.
Even with the regulations we have in much of the West, millions upon millions of workers are miserable: underpaid, relying on government assistance to make ends meet despite working full-time, and, according to data from the United Kingdom, now working longer and dying younger.
The relationship between owners and workers is a necessarily antagonistic power relationship in the free market. Under these conditions, owners will try to get the most out of their workers for the least pay and will fight like hell to keep their employees from gaining an advantage, especially a long-term one — same as it ever was. So workers need to organize and plan for the long run, which means unionization.
Unionization not only helps win concessions from management but also secures those wins for the long run and spreads them around from store to store, region to region, and even across businesses and industries. Unions are good for all workers, including those who aren’t unionized but enjoy the rising standards set by those who are.
Any bump in pay or benefits, any improvement to working conditions, ought to be welcome, unionized or not. Small wins don’t change the free market, but they do help workers who are struggling right here and right now to pay the bills and get through the day. Indeed, to those folks, small wins are big wins.
Small Wins Are Good, but We Need Structural Changes
IKEA’s recent changes shouldn’t be mistaken for a guaranteed, permanent structural shift in the balance of power between employees and those who set the rules. That’s why whenever we hear about companies doing the decent thing — often the bare minimum — we ought to be skeptical and ask ourselves why they’re doing it, and what comes next. IKEA, after all, is infamously anti-union — and has been accused of union busting more than once. A better deal for workers in the here and now is all well and good, but without a union — and with the company’s anti-union history in mind — there’s a serious risk of rollbacks.
It’s far too easy to be distracted from the broader, long-term fight by moments in which companies voluntarily do a decent thing, but we can’t forget why they do it. With IKEA, the answer is clear: the company was sick of losing more than $300 million a year to employees quitting, so they made the investment in trying to keep them. Above all else, that is a business decision concerned with the bottom line and keeping owners happy and wealthy.
Tight labor markets won’t last forever. If IKEA, or any other company for that matter, were to suddenly enjoy an advantage in the labor market, it would move to exploit it without thinking twice. That means a risk of lower pay and benefits, worse working conditions, and weaker job security protections. That’s why we need to always look ahead toward structural shifts.
To rebalance power between management and labor, workers need a union. That ought to be the primary goal for bringing about a permanent, more just and fairer relationship in which the two parties coexist. It’s far too easy to read a headline about better pay or hours or childcare and think that’s the ball game. It’s not. Not even close. In fact, those changes could reflect an attempt to undermine unionization efforts. After all, why do you need a union if you’ve got an extra dollar or two an hour this year? That’ll be the corporate line, anyway. It’s effective propaganda, and dangerous, too.
We ought to celebrate any wins enjoyed by the working class, but we can’t forget the long-term struggle, which necessarily includes unionization. And beyond that, we ought to also recall the need for even bigger structural shifts, including employee owned and controlled firms. A few dollars more each hour and more predictable shifts are great. But being part of a union and controlling your workplace? That’s far better still.