UPDATE 3-Zambia threatens to shut Shoprite after dismissal of 3,000

Thu Oct 17, 2013 8:33am EDT

* Company bows to government pressure on sackings

* Zambia is seen as growth area for Shoprite

* Zambia attracted over $3 bln in FDI in H1 2013 (Adds Shoprite comments)

By Chris Mfula

LUSAKA, Oct 17 (Reuters) - Zambia threatened to shut Shoprite stores on Thursday, a move that could tarnish its image as an investor-friendly frontier market, after the South African retailer fired 3,000 workers who went on strike.

Labour minister Fackson Shamenda said the company - Africa's biggest grocer - had backtracked on the sackings and it had been given 10 days to resolve the grievances over pay that triggered the strike action.

"We told them we would revoke their trading licence if they went ahead with the dismissals," Shamenda told Reuters, adding that Shoprite should be paying far above the minimum wage.

"I have now given them 10 days in which to negotiate and resolve the problem. All the outlets are working normally now and I am on my way to buy bread from Shoprite."

Shoprite spokeswoman Sarita van Wyk said the company would resume wage talks with union leaders next week following the order from the government.

"Due to pressure from the Zambian government, which is of the view that the minimum wage for the shop worker sector is not applicable to Shoprite as a foreign investor, Shoprite will return to the negotiation table," she said in a statement.

Workers led by the National Union of Commercial and Industrial Workers, who went on strike to demand higher pay and improved working conditions, have returned to work, the union's president Robert Munsanje said.

Zambia, the second biggest market for Shoprite outside its home market, is one of the growth hot spots for South African retailers looking to offset weak growth prospects at home.

"It appears Shoprite was within their rights to fire those workers but given Zambia's potential it is in their best interest to come to some sort of an amicable understanding on how these sort of things are handled," said Savusha Kander, a portfolio manager at Johannesburg-based Ashburton Investments.

Lusaka attracted more than $3 billion in foreign investment in the first half of this year, above the government target for the whole year, President Michael Sata said last month.

Sata is a populist who swept to power two years ago on a platform that promised an activist state to defend workers and reduce poverty in the southern African country, the continent's top copper producer.

"Sata was always going to be interventionist - that's what he campaigned on. But his interventions are legitimate, or have been so far," said Francois Conradie, a political analyst at NKC Independent Economists.

"They were all cases of enforcing labour and health and safety rules and refusing to tolerate big foreign-owned companies exploiting their Zambian workers," he said.

Shares in Shoprite were 0.67 percent higher at 1106 GMT, largely in line with Johannesburg's Top-40 index. (Additoonal reporting by Tiisetso Motsoeneng and Ed Stoddard; Writing by Tiisetso Motsoeneng; Editing by Ruth Pitchford and David Evans)

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