Grocery contract a 2-tiered omen

Current workers approve lesser benefits for new employees

Labor costs under attack

April 01, 2004|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

As Giant and Safeway grocery workers in the region cast their ballots and overwhelmingly approved a new union contract this week, they may have been voting on more than just their own future: The settlement that played out here, coupled with the aftermath of a harrowing supermarket strike in California, may have reverberating effects for workers around the country.

The five-month strike and lockout in Southern California wore on both sides in the Baltimore-Washington area as they worked to reach an accord. And the two-tiered system that California negotiators laid out for workers - the agreement outlines lesser benefits for new workers than for existing ones - were to some extent repeated in this region as well.

"It's a pretty common employer tactic, not just in the supermarket industry, so I would think that that's what would be tried again," said Gordon Lafer, an associate professor at the University of Oregon's labor education and research center. "And whether it will succeed, I think depends a lot on the strength of the union."

Looming over the supermarket labor talks are major changes in the marketplace, with consumers spending more on food at big-box stores and nonunion grocers such as Wal-Mart Stores Inc. Unionized grocers, worried that their market dominance is eroding, say they need labor concessions to remain viable. With the California negotiations settled angrily and the Baltimore-Washington ones settled quietly, the grocers seem to be getting some, though not all, of the changes they're seeking.

Officials with the United Food and Commercial Workers, which represents 29,000 members at about 340 stores in the Baltimore-Washington area, largely preserved health care benefits for existing workers - a point of contention in most contract negotiations nationwide and the key issue in the Southern California strike and lockout.

Under the terms of their new contract, existing workers will continue to pay nothing toward the premium on health care benefits, though their annual deductible will increase to $200 from $100 and other items, such as co-payments on prescription drugs, will go up.

New supermarket workers will have higher co-payments than will existing workers, and will have longer waiting periods before they are eligible for the same health care benefits as current workers.

The average hourly wage of a clerk at Safeway or Giant has been $13.19, according to Safeway. In the new contract, supermarket workers secured raises totaling $1.25 an hour over four years.

Also, current Safeway and Giant workers will continue to earn time-and-a-half or double-time for working on Sundays, while new workers will start at $1 extra per hour on Sundays, and eventually work their way up to earning time-and-a-half after five years with the company.

"The precedent here was already set in California, and that is the two-tiered systems," said Mark Hugh Sam, a stock analyst who follows supermarkets for Morningstar Inc. in Chicago.

The advantage of such systems for companies is that future labor costs will be lower.

"It's a way to help limit future labor costs," said Harry Burton, lead negotiator for Giant and Safeway. "A lot of people note that it's not the ideal way, but we do not live in an ideal world."

Some labor analysts contend such a system creates division in the ranks as employees work side-by-side with colleagues who earn more or have better health benefits.

"I've always thought that these types of arrangements, the two-tiered systems, were against what unions are supposed to be doing because ... it's the present membership voting that the new membership, the membership that's not even there yet, should make sacrifices for them," said Gary Chaison, an industrial relations professor at Clark University in Worcester, Mass.

Grocery stores are willing to agree to it because there is so much turnover in supermarkets that the more expensive tier is likely to eventually be replaced with the cheaper tier. But it also gives companies an added incentive to encourage the more expensive workers to leave, Chaison said.

Local union officials defended the two-tier contract, saying such contracts aren't new for the supermarket industry here and that they also give new employees something to work toward.

The Baltimore area UFCW workers have had a two-tiered system in place for 20 years, where part-time workers have different health care coverage for dependents.

But union officials note that under the new system they agreed to in the contract this week, new workers will eventually have the same benefits as the older workers, they just have to wait longer.

"The objective always is to protect what you have, but you've got to be flexible and I think we showed our flexibility by creating some new health and welfare plans for new hires, new premiums on Sundays for new hires," said Buddy Mays, president of UFCW Local 27 of Baltimore.

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