Every day low staff costs

27 October 2005 By Alex Fak

The retailer could cut healthcare costs by raising its employee turnover rate. This would boost the bottom line. But unless it is careful, WalMart could end up sapping staff morale and escalating its public relations woes.

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WalMart should make effort to hire younger, healthier workers, its vice president for benefits, M. Susan Chambers, said in a report to the board of directors, leaked to the New York Times. The report proposes attracting more parttimers, for example by providing them with health insurance just one year after they join, versus two years under the current policy.

WalMart's work force is ageing at the rate of 0.5 years each year, as opposed to the national average of 0.12 years. The company's benefits spending grew 15% a year over the past three years, to 1.9% of all sales compared to 1.5% three years ago. The prevalence of coronary artery disease in WalMart's workers is growing at six times the rate in the US population, and the prevalence of diabetes is growing at more than three times the rate of US work force. The company spent $4.2bn on benefits last year, including $1.5bn on healthcare.

WalMart earned $10.5bn on sales of $285m last fiscal year.

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