Three years after an IKEA factory moved to the small blue collar town of Danville, VA, the international furniture giant has become the center of a union battle, racial discrimination complaints, and high turnover from disgruntled employees.
Workers at the Danville IKEA plant say they are forced to work at a frantic pace, participate in mandatory overtime — possibly facing disciplinary action for not showing up — and raises have been eliminated. Six African American employees have filed discrimination complaints, claiming that they were assigned to the least-wanted third shift and forced to work in the lowest-paying departments. Moreover, while making a profit of $2.2 billion in 2009 and a 7 percent sales increase in 2010, the hourly wage in the Virginia IKEA packing department was slashed from $9.75 to $8.00. Attempts at forming a union have also been thwarted by IKEA, as some of the 335 IKEA workers in Virginia signed cards expressing interest in forming a union with the International Association of Machinists and Aerospace Workers. But, in response, IKEA hired the law firm Jackson Lewis — known for keeping unions out of companies — and workers were required to attend meetings where the management highly discouraged union membership.
A colossal difference exists between IKEA laborers in Sweden and Virginia:
chart Vacation Days Per YearSalary Per HourIKEA workers in Sweden5 weeks off$19/hourIKEA workers in America4 days off selected by workers, 8 days selected by management$8/hourBut some IKEA employees work for even lower wages and have no benefits, as IKEA draws one-third of its workers from temporary-staffing agencies. These conditions have caused Bill Street, who tried to organize IKEA workers with the machinists union, to say that it’s “ironic that Ikea looks on the U.S. and Danville the way that most people in the U.S. look at Mexico.”
What’s more perplexing is that while busting unions and paying workers low wages, IKEA is owned by the world’s richest charity organization. The parent company of IKEA is the private Dutch-registered Ingka Holding, which, in turn, is owned by the tax-exempt, non-profit entity Stichting Ingka Foundation (SIF). With a mission dedicated to “innovation in the field of architectural and interior design,” the Economist valued SIF at $36 billion in 2006.
The net worth of SIF outstrips that of the Bill and Melinda Gates foundation — valued at $33.5 billion in 2009, a full three years after SIF’s conservative estimate of $36 billion. But its grant of only $1.7 million annually to the Lund Institute — “barely a rounding error in the foundation’s assets” — shows that SIF, technically classified as a charity organization, is not about good deeds. As a comparison, the Bill and Melinda Gates Foundation dispersed $1.645 billion towards curing the diseases affecting the world’s poor. Even more striking, the money SIF has acquired from IKEA, while in the tax haven Netherlands, is used “for investing long-term in order to build a reserve for securing the IKEA group, in case of any future capital requirements.” Whereas, the grants from the Bill and Melinda Gates Foundation are used to “improve access to advances in global health and learning.”