Academic journal article Monthly Labor Review

Labor-Management Scene in 1986 Reflects Continuing Difficulties

Academic journal article Monthly Labor Review

Labor-Management Scene in 1986 Reflects Continuing Difficulties

Article excerpt

Labor-management scene in 1986 reflects continuing difficulties The paramount issue in labor-management relations in 1986 was the same as it had been for several years--how to deal with economic problems confronting both companies and unions. The focus of negotiations was on meeting the competition, especially from foreign firms in manufacturing and from domestic firms in construction, telecommunications, and transporation. To do this, bargainers concentrated on ways to restrain labor costs, increase productivity, and preserve jobs. New approaches emerged, and longstanding bargaining patterns disappeared as both labor and management sought to adjust to the shifting conditions in all forms of economic activity, ranging from individual plants to entire industries.

Efforts to restrain labor costs are reflected in major collective bargaining settlements (involving 1,000 workers or more) in private industry during the first 9 months of the year. Wage adjustments averaged 1.9 percent annually over the life of the contract. The last time the same parties settled, generally 2 to 3 years ago, the annual adjustment averaged 2.9 percent.

In addition to restraint in wages, several types of cost-reducing contract provisions continued to be adopted in 1986, often as alternatives to outright compensation cuts. They are discussed briefly below.

Two-tier compensation systems were adopted under contracts covering more than 200,000 employees, compared with more than 700,000 in 1985. Such systems provide for permanent or temporary lowering of wages and/or benefits for new employees. The totals are based on the number of employees on the payroll at the time of a settlement, rather than on the unknown number of new employees that will enter the lower tier in the future.

Another cost-savings approach that continued in 1986 was lump-sum payments, adopted in contracts for more than 675,000 employees, about the same as in 1985. A typical 3-year contract might provide for such payments in one or more years and specified wage increases in the other years. One cost advantage to employers results because the lump-sum payments may nt be taken into account in calculating certain benefits, such as pensions.

Health care cost-containment provisions also continued to be adopted. At least 425,000 workers were affected by the adoption of such provisions in 1986, compared with at least 700,000 in 1985. Generally, the provisions aim at minimizing plan costs by monitoring aspects of health care such as length of hospital stays, fee levels, and the necessity of surgery. In some cases, employees are required to pay an increased share of the cost of average.

Cost-of-living allowance (COLA) clauses were terminated or su spended for 372,00 workers and established for 24,000 worker as a result of settlements during the first 9 months of the year. This contributed to lowering the proportion of workers under major agreements with COLA clauses to 40 percent, from 40 percent at the end of 1985.

Work stoppages continued to be used sparingly as a negotiating tactic. There were 65 major work stoppages (involving 1,000 workers or more) in the first 10 months of 1986. Although already above the record low of 52 for all of 1985, this is still below the number during each of the post-World War II years through 1980, when there were about 200 to 400 annually. Formation of labor-management teams to improve productivity and employment conditions also reflected a cooperative, rather than a combative, attitude on the part of some negotiators.

During the year, employers in industries such as steel, cans, and forest products moved from pattern bargaining toward bargaining on a company-by-company or even plant-by-plant basis, joining other industries that had adopted the approach in earlier years. Management's argument for terminating pattern bargining was that it was no longer appropriate or practical because of sometimes sharp differences in financial conditions among companies and plants. …

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