It's that most wonderful time of the year, when the employees of Amazon's (AMZN) German warehouses go on strike. The dispute has been running since 2013 and focuses on a point that may seem trivial but could hit the company's business model: whether workers in German warehouses should be categorized as retail or logistics employees.
Retail employees would be entitled to more money, and this is why German trade union Verdi keeps organizing these strikes. Germany is Amazon's second-largest market after the U.S. The online retailer employs around 11,000 warehouse staff in Germany, plus thousands of seasonal workers.
This year, the strikes hit three of Amazon's nine warehouses in the country and are set to run until Dec. 24, according to a report by Reuters. Trade union representatives did not say how many employees will walk out, only that they expect hundreds of workers in each warehouse to go on strike.
Amazon -- which is a holding in the Growth Seeker and Trifecta Stocks portfolios -- said the strike does not affect its operations. However, Reuters quoted Verdi leader Stefanie Nutzenberger as saying that delivery trucks were lining up for kilometers waiting to be loaded during a recent walkout at one warehouse.
It is difficult to say what effect, if any, these strikes have on Amazon's top line. Looking at the company's annual report for 2014, when a worse strike took place involving five of the nine warehouses, a slowdown in the pace of sales growth is noticeable. Net sales increased in Germany by 13.1% year-on-year in 2014, much slower than the 20.6% pace of increase in 2013.
But a deeper look at the figures suggests the strike in Germany is not the main culprit for the slowdown. The pace of sales slowed overall in the quarter that ended in December 2014, to a 14% increase from the 20% growth rate recorded in the September 2014 quarter, according to data from FactSet. Things started picking up again in the June 2015 quarter, and the pace of growth for the company's overall sales was a healthy 29% in the quarter ended September 2016, for which the most recent data exist.
Still, the dispute could harm Amazon over the longer term, and it is something that shareholders definitely should watch. The online retailer regards its warehouse workers as logistics employees and says it pays them above-average pay for that sector in Germany. However, the trade union argues the workers should be classified as retail workers and should be paid higher wages.
In Europe, these things have a habit of going the workers' way in the end. Just look at the recent court ruling in the U.K. that Uber workers must be classified as employees rather than self-employed. This means the car-hailing app will need to pay them holiday and sick pay, as well as make social security contributions to the state.
The strike may seem inconsequential for now, but these disputes have a habit of building up over time. As it is, if Amazon's German workers do end up winning the current dispute, it could mean the company must pay its employees in the eurozone's biggest country more money, which would hurt its margins.Remember, too, that there are general elections in Germany next year. A U.S. company in a dispute with its workers would make an easy target for populist politicians -- and if anything, the U.S. presidential election has demonstrated that we are in an age when populism wins.