Marketing and all things related

Mexico has long been a poverty-stricken nation.  Sixteen years ago, Walmart (NYSE: WMT) began opening stores in Mexico as a partner to the country's leading retailer at the time.  Today, Walmart is Mexico's largest private-sector employer with 150,000 local residents on its payroll and another 19,000 between the ages of 14 and 16 who "volunteer" to work at Walmart stores after school.

These "volunteers" (mostly baggers) are not paid by Walmart.  The only money they receive as compensation for the services they provide to Walmart are the tips customers give them.  In fact, Walmart has posted a sign in at least 62 of its stores operating under the Superama name that say, "Our volunteer packers collect no salary, only the gratuity that you give them.  Superama thanks you for your understanding."  What understanding?  Are customers expected to understand that they are responsible for paying Walmart's adolescent workers because Walmart is too cheap to pay them? 

Again, Mexico is a country where residents suffer from extreme poverty.  Minimum wage is just $5 per day, and half of the population lives on less than $4 per day.  Walmart de Mexico, on the other hand, reported net earnings of $1.148 billion in 2006 and $280 million in profits for the second quarter of this year (up 7% from the same time last year).

It's important to mention that Walmart is complying with all labor laws in Mexico by calling their teenage workers "volunteers," and statistics show that teenagers volunteering to work at Walmart are less likely to get involved with drugs than those who panhandle or sell merchandise on the streets.  You can read more about how great Walmart claims to be in with regard to this business strategy at Newsweek.

Is Walmart taking advantage of poorly written labor laws in a third-world country?  It sure seems like it.  Walmart is proud of the fact that they give their "volunteer" teenagers bonuses for keeping up their grades and providing accident insurance to the teens, which is valid when they're volunteering as well as when they're traveling to and from their volunteer duties at Walmart.  If Walmart is paying bonuses and insurance to these kids, then it sounds like they're employees to me. 

Walmart stands behind their "volunteer" bagger program and claims they are not in violation of any laws, but does that make it right?  Walmart's defense sounds like a poor case of semantics to me.  They can call these kids volunteers as much as they want, but that's just a word.  It sounds like these kids are acting as employees, and Walmart is taking advantage of the kids, the customers who are essentially paying the kids, and sketchy labor laws.

This isn't the first time Walmart has been under fire for violating labor laws.  This is perhaps just the first time that they're being publicly flippant about it (read the Newsweek article to see Walmart's response to Newsweek's questions about the volunteer bagger program).  Recently, Walmart in Mexico City has been in trouble for providing inadequate training and forcing children to work double shifts, which exceeded the 6-hour per day limit allowed by the International Labor Organization (ILO).  In February 2005, Walmart had to pay the U.S. Labor Department over $100,000 in civil penalties after violating 24 child labor laws including minors operating fork lifts, chain saws and other dangerous equipment.  Sounds like Walmart has a track record of arrogance when it comes to complying with child labor laws.

What do you think?  Is Walmart right or wrong in this situation?  Should they be paying their "volunteer" 14, 15 and 16-year old baggers in Mexico?

Photo: Walmart in Playa del Carmen, Mexico