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Business Costs & Regulation

Unions Face Tough Contract Talks
In 2010

As employers look to cut costs, labor hopes to protect past gains.

In this year’s contract talks, labor unions are setting their sights lower, seeking to hold on to what they have, rather than pushing for new concessions from employers. With the jobless rate stubbornly high and the economy uncertain, labor leaders know this is not the time to push for gains.

“This is not a climate in which labor can be effective in making gains. Management has the upper hand and will continue to demand cuts,” says Marick Masters, director of the Douglas A. Fraser Center for Workplace Issues at Wayne State University. Employers will push hardest to cut benefits on health care, shifting more costs to workers. They will also seek more two-tier wage and benefit structures, with lower levels for new workers, and more-flexible job classifications and work rules.

Longer contracts will be a trend -- four or five years instead of three. Employers want longer agreements because they make it easier to predict costs; unions now favor them because they can preserve benefits longer.

Public sector bargaining will be especially contentious. Given the budget crunch in many states, unions that represent state and municipal workers will have a tough time holding the line on benefits and stopping furloughs. Public employers also are under pressure to reduce their legacy costs, which means pensions and retiree health care benefits will be on the table.

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Strikes are extremely unlikely. Although there is much pent-up resentment, labor leaders realize that for many businesses, a strike would be the death knell, wiping out existing jobs. “To even contemplate a strike in this environment is beyond foolish,” says Masters.

Here’s a rundown of major labor agreements to be negotiated this year:

•150,000 railway workers, including those at BNSF Railway, CSX Transportation, Union Pacific and Norfolk Southern Railway.

•275,000 U.S. postal workers and 123,000 rural letter carriers.

•50,000 hotel workers in nine North American cities, including Washington, D.C., Toronto, Minneapolis, Chicago, Los Angeles and San Francisco.

•178,000 United Food and Commercial Workers at major supermarkets in locations ranging from California to Texas to Massachusetts.