Bargaining in Uncertain Times (2002)
By Curt Ostrander
The nation's economy is shaky, state and local governments face fiscal problems and the bargaining climate is uncertain. In a thriving economy, effective bargaining requires creativity by the union and management. Bargaining in uncertain times requires even greater innovation.
Some employers may try to get "givebacks" from the union, even if they are not having real economic problems. It is important to make sure that the employer's claims of hardship are real and, if they are, that there are no budget "fixes" that are feasible (see Budget Gimmicks in CBR 2001, #3). When we do face genuine problems with the employer's ability to pay, our challenge is to reach an agreement that benefits workers and has minimal economic impact. The following are some options.
Wages and Compensation
- Gainsharing language links either part or all of a wage or benefit increase in compensation to economic or productivity goals established by union and management. Union and management work together to achieve those goals, which can include increased revenues or decreased costs.
- "If/come" language conditions either part or all of an increase on the employer achieving specified goals, usually with respect to revenues. Gainsharing is usually focused on operational improvements while if/come language is focused on bottom-line financial performance.
- Delaying a pay increase to later in the year, or splitting an increase so that part is received at the beginning of the year and the rest later, can help an employer's cash flow while still raising employees' base wages.
- Wage re-openers: Fiscal conditions can change during the term of a contract. A reopener, to revisit economic items before the rest of the contract expires, is an alternafive to locking in unfavorable wage and benefit language.
- Lump sum or bonus payments: These are one-time cash payouts that do not increase employees' base rate of pay. They put money in members' pockets but provide no permanent pay raise.
Other Compensation
- Benefits: Cost increases in health benefits, and especially prescription drugs, are straining employers' budgets. Joint labor/management committees have been somewhat effective in reducing health care costs. In addition, employer participation in group purchasing arrangements may help to slow cost increases.
- Tax-deferred benefits: Various federal laws permit employees to set aside portions of their income for salary savings plans, dependent care services, public transportation and so on. The amount set aside is not subject to federal income taxes, which means more money in employees' pockets. The employer incurs no cost, unless it chooses to contribute to the benefit, but it must administer the funds.
- Time off. Some holidays or leave days, such as the employee's birthday or personal days, do not affect service levels, so the employer should not have to fill in with other staff.
- Pensions: If the pension fund is financially sound, irnprovements in pension benefits may be possible because the cost of the improvements is not paid all at once. Improvements could include an increase in the multiplier, reduction in years for eligibility, or employer pick-up of part or all of the employee contributions.
- Stipends: Tool allowances, uniform allowances, shift differentials and other differentials may provide a significant economic benefit to employees at minimal cost to the employer.
Contract Language Improvements
When economic gains are hard to come by, there may be an opportunity to improve weak contract language or to add language that has no direct economic impact. Following are some possibilities:
- Bargaining to organize: Getting an employer agreement to add employees to the bargaining unit, or prohibiting the employer from interfering with organizing other workers under its control, can build union power for the long haul.
- Contracting out: Language restricting contracting out or privatization provides job security and maintains the union's strength.
- Contracting in: Work that is currently privatized can be brought back in-house at the expiration of the private vendor's contract.
- Career development: Employers' workforce needs change over time. Strategies that allow current employees to move into emerging areas can benefit workers and management.
For more information on bargaining in uncertain times, please e-mail, call (202) 429-1215 or write to: AFSCME Department of Research and Collective Bargaining Services, 1625 L Street, N.W., Washington, D.C. 20036-5687.