H&M Sweden restructures its workforce organization and wants to reduce the working hours of hundreds of store employees. Meanwhile, it also hires a few of them with no minimum working hours defined in their contracts.
H&M, the Swedish low-cost clothing giant is restructuring in Sweden by reducing staff in their stores without terminating contracts. They reschedule employees and reduce working hours, while job offers are published with no minimum working hours, depending on the need.
On H&M’s career website, more than half of the 40 open positions in Sweden are for sales advisors, a position in stores to serve customers.
And at least four job postings for sales advisors in Sweden don’t have any minimum working hours. Five more open positions mention the job is based on a flexible hourly contract with no mention, unlike the other positions published, of the working hours which will “depend on need”. Another 16 job postings for sales advisors are on the website, including summer job contracts, and all 16 are short-term contracts with working hours going from 6 hours to 30 hours a week.
H&M in October decided to reorganize its staffing structure and notified authorities and union representatives of about 400 fewer positions across 69 stores in Sweden. But in December Handels, the Commercial Employees’ Union of Sweden, anticipated that 1,500 people could be affected by the restructuring.
And about 1,500 full-time employees from 69 stores across the country, about a third of H&M’s 4,500 store employees in Sweden, have been proposed to reduce their hours, Aftonbladet reported recently.
“Virtually no one in the stores will be kept on full-time. We have examples of people who have worked 30 years in the company and as a thank you for that, they are now getting this kind of offer. How can you live on a contract that gives you five hours a week? It’s not possible,” reacted Linda Palmetzhofer, chairman of Handels to the Swedish newspaper. In the worst-case scenario, some full-time employees got offered 5 hours of work a week, according to the union in which about one-third of its 155,000 members are women working part-time.
In Sweden, most employment conditions are negotiated by sectors between trade unions such as Handels and employers in collective agreements. There is no statutory minimum wage according to law, for instance. And a contract with no minimum working hours is possible in Sweden, as is in the Netherlands.
The number of part-time workers with only a few hours a week has increased in Sweden recently.
In the fourth quarter of 2022, 267,000 people in Sweden worked short part-time, between one and 19 hours a week. It accounts for 35,000 people more than the fourth quarter of 2021, a 15 percent increase. Meanwhile, the number of employed persons who work full time (35 hours or more per week), who accounted for 4,032,000 people in Sweden, grew by 98,000 people, or only by 2.5 percent, according to Statistics Sweden. The unemployment rate in Sweden was 6.9 percent in December 2022.
H&M wants to reach a double-digit operating margin for 2024
In the fiscal year 2022 from November 2021 to December 2022, the H&M group’s net sales increased by 12 percent to 224 billion kronor (21 billion dollars), and 6 percent in local currencies, according to its financial report. But net sales in the fourth quarter were flat in local currencies, despite comparing with a period more heavily affected by the COVID-19 pandemic.
Operating profit decreased by 53 percent for the year and the 7.7 percent operating margin from 2021 went down to 3.2 percent in 2022. And the company wants to reach a double-digit operating margin for the year 2024.
Helena Helmersson, the chief executive of H&M Group, which also includes other stores like Cos and Arket, explained the fiscal year 2022 was marked by negative external factors such as the increase of shipping and supply chain costs and the Russian invasion of Ukraine.
The group decided to wind down its business in Russia and Belarus, 175 stores in Russia and 3 in Belarus, last year which cost 2.6 billion Swedish crowns (245 million dollars). Globally, the group downsized to 4,465 stores, down 336 compared with the same point in time last year. In 2023, the H&M group expects to close 100 stores globally.
The fourth quarter results also included a one-time cost of 836 million crowns (79 million dollars) for a “cost and efficiency program” without detailing the plan further. However, it was expected to provide annual savings of 2 billion crowns (189 million dollars) starting in 2023.
Moreover, the financial report regarding group employees also mentioned that “transformation work is under way within the H&M group” in order to “meet the increased digitalization in society, with new customer behaviors and a changed competitive situation.”
As of November 2022, the average number of employees in the group converted into full-time positions was 106,522, of which 10,447 were employed in Sweden.