Both the Teamsters Union and the Independent Union of Flight Attendants this week reached tentative contract agreements that include major concessions to management. These agreements go against the recently developing trend away from "concessionary" bargaining.
While the Bureau of Labor Statistics reports that wage increases these days are lower than in recent years, contract settlements lately have been providing wage boosts of between 3% and 5% without significant "give-backs" by unions.
But those negotiating for the Teamsters with major trucking companies and for flight attendants with Pan American agreed to accept two-tier wage structures, largely in recognition of the fact that the trucking and airline industries have been struggling.
Two-tier wage structures have become one of the most serious problems for workers and one of the most effective ways that management has found to cut labor costs. They come in two forms: In one, newly hired workers start at lower rates of pay but eventually catch up to more experienced workers doing the same job. The Teamsters' pact is an example. In the other, the pay rate for new workers is permanently lower than that for others, as provided in the flight attendants' agreement.
In recent years, union workers confronted with recessions and high unemployment often took significant wage cuts and made other concessions just to keep their contracts or jobs.
Union workers have also accepted, with great reluctance and sometimes only after long strikes, one-time pay bonuses instead of permanent boosts, increases in the number of part-time workers and reductions in or even elimination of cost-of-living clauses.
Although workers may find the effects of such concessions lingering for years, there is some good news for labor. In return for "give-backs," many unions are getting some concessions of their own from management.
More than ever, union contracts today include provisions for employee stock ownership plans, profit sharing, worker participation in managerial decisions and worker representation on corporate boards. Few of these contract provisions are new ideas, but the rapidly increasing number of management and labor concessions is reshaping traditional contracts--which generally included only clauses on annual pay raises, cost-of-living increases, health care, pensions, holidays and vacations.
In many cases, the government is making it well worth it for companies and unions to seek such provisions.
The number of employee stock ownership plans has more than doubled in the last five years and now covers more than 7 million workers, according to David Binns, managing director of the Washington-based Employee Stock Ownership Assn.
Jack Curtis, a San Francisco-based ESOP attorney, said one reason for the plans' increasing popularity is the tax benefit to the company. In 1974, company contributions to an ESOP became tax deductible.
Last year's tax revisions passed by Congress included an even more attractive incentive. The new law lets banks pay taxes on only half of the interest that they earn from money lent to an ESOP. That means banks can make loans to ESOPs for less than the market rate of interest, Curtis noted. The company then gets the money the ESOP borrowed by giving the ESOP shares in the company.
In the long run, such plans are expected to benefit management and workers by giving employees an interest in their companies' profitability.
But unless the workers combine the power of the shares they own as individuals in an ESOP, they cannot be the decisive factor in managing the company they partly own.
An estimated 7,000 companies now have ESOPs, with workers in about 20% of these owning more than half the stock. However, workers have actually taken control in only a handful.
Profit-sharing plans are also on the rise. Many companies initiate them as an incentive for workers, but others use profit sharing as a lure to get workers to accept contract concessions.
In the last five years, the number of workers covered by profit-sharing plans has increased from about 17 million to more than 20 million, and the number continues to increase rapidly, according to the Evanston, Ill.-based Profit Sharing Research Foundation.
Other shifts in contracts are more difficult to quantify. While fewer than a dozen major companies have worker representatives on their boards, many of the nation's largest companies have adopted some form of worker participation in the corporate decision-making process.
But while such devices as ESOPs, profit-sharing and employee-participation programs usually help workers, other shifts from traditional contracts, notably the two-tier structure, hurt them.
Management often finds it easy to push through a two-tier plan because it affects workers not yet employed. The two-tier wage structures are easier to sell to workers because, generally, those already on the payroll don't have to take a pay cut and often are even given pay raises.