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How to Bargain Concessions (If You Must)

Tuesday, 29 May 2012 16:32 By Richard de Vries, Labor Notes | Op-Ed
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Can concessions save jobs? Almost always they cannot, and certainly not in the big picture. Concessions can’t fix a collapsed market or stop offshoring, nor the 1%’s relentless assault on the working class.

The best rationalization for concessions is a retreat to fight another day. Concessions may save jobs in the short term if the union bargains hard in areas not traditional to our thinking and gets specific, concrete guarantees.

But not without big costs. In the Teamsters, one of the largest less-than-truckload carriers, Yellow/Roadway, stopped paying pensions and cut wages 15 percent. Jobs were being lost. Through concessions bargaining, YRC was preserved, along with 35,000 jobs out of perhaps 42,000. The union ousted the CEO and audits and financial controls were put in place.

The union now sits on the board of directors, but it came out weaker. Members argued with each other, focused distrust on local and national leaders, and have not settled on a plan to go forward. The non-union competition immediately started cutting wages, and union companies have made the YRC deal the cornerstone of their bargaining demands.

Get the Books 

When the employer comes looking for concessions, it may be because it wants interest-free money that no bank or investor will lend.

The Supreme Court ruled in the 1956 Truitt decision that when an employer asserts an inability to pay, “it is important enough to require some proof” of the accuracy of the claim.

Concessions have a dollar value. Before agreeing to anything, demand at least six years of audited records with total transparency. The members need to know how the employer’s income has been used. Six years are needed because in a long recession you have to go back far to find a base year.

If the company balks at paying for the audit, red flags should go up. Every time the company negotiates loans from a bank, the bank will require a certified audit. If the company’s books are scrupulously clean, the union’s audit should be relatively cheap.

But if the books are in such bad shape the audit will be long, costly, and complex, the union should ask why members should lend their future earnings to a poorly managed company.

Ask questions about technology upgrading, too. If management is not maintaining and improving the assets, the likelihood that a modest concession will save the company is slim.

Unzip the Zipper 

Buried somewhere in the contract there is probably a vague phrase that waives the rights of both the union and management to bargain during the term of the agreement.

If management wants to break this “zipper clause” to try to save money on wages, insurance, or pensions, this is the opportunity for the union to demand constant bargaining, monthly review of the books, and bargaining about permissive subjects like layoffs and management perks.

Historically forbidden territory can now be entered.

Over and over the NLRB has said the transfer, closing, or relocation of a facility is the God-given right of the employer and a permissive subject of bargaining. Now it’s on the table. In exchange for concessions, the union should demand that nothing gets shuttered except by mutual agreement.

Look carefully at nonproductive managers and the bloated salaries that accompany them. Cutting management should be a condition of the union’s taking layoffs and concessions.

The union’s audit should be deep enough to find all management compensation, including company cars, gas allowances, credit cards for meals, cell phones, stock options, and bonuses.

Share the pain. Management needs to take deep cuts. Demand that no person outside the bargaining unit will receive increased compensation except in the same amount as unit members.

Bring Back the Work 

Managers say they have to subcontract because someone outside can do it cheaper. Task by task, the union needs to bargain to bring the work back, and to make sure members on layoff get it. It might require taking a lower wage rate—but be sure to specify an expiration date for that cut.

The union should try for language that says no subcontracting, period. A fallback is no subcontracting while reduced wages are in effect.

Different Kinds of Cuts

Wages are usually the first place companies go. Wage concessions should be given one year at a time. Auditing and continuous collective bargaining are exhausting, but the concession needs to be justified annually. Is management actually turning the company around?

Another big-ticket benefit is paid time off. At one company, members chose unpaid vacation—with the option to take their vacation or not—rather than a deep wage cut.

Can various overtime rules, like shift premiums or double time on Sundays, be suspended for a year? Don’t give management the whole pizza; give them a slice and then you’re back at the table.

Most important is understanding the true worth of a concession to management. Say the benefit fund needs the equivalent of a dollar-an-hour increase and the company proposes to pay for it with a dollar-an-hour wage cut.

But that’s a lot of extra money going into the company’s pocket. Besides wages and overtime, the employer is paying into Social Security, worker’s comp, and unemployment for each hour worked. Careful costing could show that the company needs only a 42-cent wage cut to save what it needs for the benefit fund.

Layoff Rules 

Rather than deep layoffs, could a shortened work week be tried for a year?

If layoffs are unavoidable, extend the recall period to the length of the worker’s seniority. At YRC it was raised from three years to five.

Some contracts say that if a worker isn’t back on the job within three days after a call-back from layoff, he or she is terminated. This could happen even if the employer is offering only one day of work. Bargain a clause that says if employees want to take a leave of absence to work elsewhere while on layoff, they can still preserve their right to return.

Stockholm Syndrome

Negotiators in continuous bargaining are at risk of identifying more with management’s problems than with those of the members who elected them to find the best deal in a bad situation.

This is less likely when the local has a history of total transparency, with long and tortured meetings going over contracts word by word and members understanding the costs of their various contract clauses.

Avoiding Stockholm Syndrome takes constant member involvement and integration into the bargaining process. Members should be encouraged to attend several sessions so that they can understand the proposals of both management and the bargaining team.

Always bear in mind that “living to fight another day” is problematic. Are we looking to save the union institution or to save the members’ livelihoods?

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