A demonstration held this morning at the Swedish furniture giant’s Tempe store in Sydney also highlighted the low amount of tax it pays in Australia, by channeling royalties through tax havens and by shifting profits through intercompany loans.
Ikea has avoided paying taxes in Australia for many years, amounting to millions of dollars lost to the public purse. Documents show that between 2004 and 2014 Ikea reduced its taxable income by paying more than $2 billion in franchise fees, licence fees and royalties to its European parent, Ikea Supply. Despite booming sales it was able to mask its profits and pay low tax. The latest report from the Australian Taxation Office release earlier this month showed Ikea paid 4.7% tax in 2014-15 on its total income, just $12.5 million on almost $900 million.
Ikea hires truck drivers from contractors based in Eastern Europe on local rates who drive throughout Western Europe. Protesters called on the company to ensure drivers are given the correct rates and conditions as is required in the country where they do the majority of their work.
“The cheap furniture Australian consumers buy at Ikea comes at a cost. What they are doing is old-fashioned exploitation which is forcing truck drivers into slave-like working and living conditions. With the wages Ikea pays its transport contractors and drivers in Europe many cannot afford to buy a simple meal or to rent a room for the night. Ikea needs to face up to its treatment of drivers and stop this abuse now,” said Tony Sheldon, TWU National Secretary and International Transport Workers’ Federation road transport section chair.
Protests are taking place in several countries around the world this week to highlight Ikea’s refusal to agree to a solution to end the exploitation, despite two years of talks with the ITF.
A twelve-month investigation by ITF unions found that the IKEA supply chain contains illegitimate transport company businesses models, the abuse of workers’ rights and unacceptable working conditions.
It also found:
- Drivers on wages of less than €200 ($286) a month
- Drivers living in their truck for weeks and months on end
- Drivers from Baltic states insured as tourists
- False documents relating to the hourly rates being paid to drivers (to show compliance with the German and French minimums wages)
- Breaches of resting and driving times
- Limited access to clean water and cooking in truck stops (with limited hot food)
- Reports of discrimination based on nationality
One Romanian truck driver told the ITF: “We have a contract that says we get €8.50 ($12) per hour, which is false, we don’t get that sort of money. And where do I live, eat and sleep? In the cabin of my truck. It’s not normal to live like this for two or three months.”