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24 I Companies & Markets bne November 2017
Central Europe and the competition among companies for available workers, pressure for pay hikes is unlikely to go away.
Hungarian unions held the first ever nationwide strike in the retail sector at Tesco stores in the second week of September, after their demands for a 25% wage hike and a 15% staff increase remained unmet. Tesco recently announced that
“Tesco might now put its regional subsidiaries up for sale in bulk or individually in March 2018, if wage demands are not dropped”
it is to raise wages for the lowest-paid staff from a monthly HUF176,000 (€566) to HUF179,000, retroactively applied to September 1, but the unions are demanding a clear roadmap for general wage increases and, more importantly, the easing of workloads.
bne:FX
Kazakh tenge under strain as it hits lowest level in nearly a year
Kanat Shaku in Almaty
The Kazakh tenge hit KZT343.21 against the greenback, its lowest level in 11 months, during October 4 trading on Kazakhstan’s stock exchange. The rate, recorded at 15:00 Astana time, was down from the previous trading day’s closing price of KZT341.24.
The central bank attributes the tenge’s weakness to speculative trades. The losing streak prompted the regulator to inter-
vene in August and September by selling foreign currency on the domesic market, but it insists that the sales, which were relatively small, were aimed only at smoothing out exchange rate volatility rather than supporting the currency. The central bank reported that it was a $70mn net seller of foreign cur- rency in August but as yet has not given a figure for September.
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The four subsidiaries in the Central European region
account for some 11% of Tesco PLC’s total revenues and, with a gross margin of 2%, Tesco should consider selling even at a low return, according to seekingalpha.com.
Wage talks between Tesco management and the labour unions continued on October 3 in Hungary, but both sides agreed not to disclose details. They scheduled another round of talks for October 13.
Tesco has a total of 206 stores in Hungary, with 112 of them hypermarkets. With 23,000 staff, it is the largest employer in the retail sector.
In the Czech Republic, Tesco owns more than 200 stores, 19 petrol stations, and seven shopping centres, employing nearly 14,000. It bought the Zabka chain, together with the Koruna chain, from Slovak investment group Penta for $52mn in 2010.
As part of the deal, Tesco Czech bought a total of 128 stores. The 47 Koruna stores were converted into Tesco Express outlets, while the Zabka chain continued to run under the same brand.
The continued strain on the tenge comes despite Kazakh central bank chairman Daniyar Akishev’s statement earlier in September that the tenge may strengthen thanks to growing energy prices that would boost the oil-exporting nation. The statement was largely aimed at discouraging foreign currency retail buyers who doubled dollar purchases in August. But oil prices have come under renewed pressure in the past several
“The central bank attributes the tenge’s weakness to speculative trades”