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Checking out of the past

The pact between the grocery chains and the union shows both sides have accepted new economic realities.

July 26, 2007

Clearly, grocery chains and their workers learned a lesson in 2004, when management and labor at Albertsons, Ralphs and Vons approached contract negotiations with intractable positions on healthcare and wages. Back then, stubbornness on both sides led to a 141-day strike and lockout that cost the chains an estimated $1.5 billion and employees millions in lost wages. The talks, such as they were, resulted in an awkward "two-tier" wage setup that penalized newer workers and created high turnover that wound up hurting veterans and management.

A new, more equitable contract shows that the grocery chains now understand they can't just ignore workers' demands on healthcare and wages, and that the 65,000-member United Food and Commercial Workers has figured out that it too must acknowledge today's economic realities.

A peaceful resolution seemed uncertain as recently as three weeks ago. Discussions to replace the old contract, which expired on March 5, had dragged on for more than six months. The new agreement, approved by 87% of workers over the weekend, looks like an unqualified victory for the UFCW, which has reorganized to better negotiate with the large supermarket companies. The UFCW sought wage increases, a single pay scale for all employees and shorter waits for health insurance for new employees and their families -- and got practically all of it. Albertsons, Ralphs and Vons rolled back the two-tier wage system. They also acknowledged their crucial role as providers of healthcare for their workers.

For its part, the union agreed that workers also bear some burden for their healthcare expenses. The grocery chains' new plan will emphasize preventive care, establish healthcare savings accounts for employees and require workers to pay premiums for coverage. The goal is to make employees more sensitive to how they spend their healthcare dollars, in theory leading to less waste.

It's not entirely surprising to see this industry display a bit of forward thinking. Safeway chief executive Steve Burd has been pondering healthcare since the lockouts of 2004, and has joined forces with Big Labor to call for universal coverage. Burd, whose company owns Vons, is stepping into the 21st century. Finally, it seems, fellow grocery executives and their union counterparts are doing so as well.

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