Job fears as Schlecker goes bust

Around 3,000 people may lose their jobs in Austria as a leading drugstore chain declared itself bankrupt.

It was reported last Friday that discounter Schlecker may be forced to stop operating due to declining turnover. The German company announced yesterday (Mon) it opted for starting controlled insolvency procedures in a bid to stay in business. The step means that Schlecker’s German staff can be sure of receiving their regular salaries in the coming three months. Experts think that hundreds of the company’s 7,000 stores in Germany could be shut or taken over by rivals. Schlecker is represented in eight European countries.

Schlecker Austria is not part of the bankruptcy negotiations. A spokesman for the company claimed yesterday that the firm’s 3,000 staff must not fear losing their jobs. Analysts expect a considerable number of Schlecker Austria shops to close for good nevertheless. The German company – which focuses on offering low-priced cosmetics and housekeeping products – currently runs 970 stores in Austria. The number of Schlecker Austria branches has dropped dramatically since 2005 as the firm’s competitors Bipa and DM proved to be stronger.

Bipa, which belongs to the Rewe Group, dominates the market but DM is catching up. There are around 560 Bipa stores in Austria. DM achieves a turnover nearly as high as Bipa’s, according to business newspaper reports. Müller, another German company, is challenging the position of Bipa and DM with larger stores.

Creditors of Schlecker stressed that the family who owned the firm must contribute private assets to the rescue of the business. Business partners of the Ehingen-based enterprise – which achieved a turnover of 6.55 billion Euros in 2010 – expressed concerns about whether the firm would be capable of paying for products. Several enterprises allegedly consider stopping delivering to Schlecker until the situation was clarified while Austrian trade unionists said they would wait to see if Schlecker Austria employees received their January wages before planning further steps.

News that Schlecker Austria could be dragged into the eye of the economic storm of its German mother company comes only days after Sony revealed plans to lay off 158 of its 1,300 staff at two factories in the province of Salzburg. The international technology company produces CDs and DVDs in facilities located in Anif and Thalgau. Sony is reportedly holding talks with works council leaders about the amount of financial compensation for the affected workers.

Research by the European Commission’s (EC) statistic organisation Eurostat showed earlier this month that Austria had the lowest jobless rate among the European Union’s (EU) 27 member countries last year. Only four per cent of people living in the country were out of work last year. The number of Austrian citizens who had a job reached a record level of 3.42 million in 2010, according to figures presented by Social Democratic (SPÖ) Labour and Social Affairs Minister Rudolf Hundstorfer.