Tough choices for labor unions: accept wage cuts, or lose jobs
An increasing number of companies are offering employees a stark choice: either risk losing your job or accept a reduction in wages, benefits, or working conditions.Skip to next paragraph
Subscribe Today to the Monitor
American Motors employees received the latest such choice. In a bid to conserve cash, the company Nov. 11 asked union workers to give up 10 percent of their wages and benefits over the next 22 months. The $150 million would be repaid, with 10 percent interest, starting as early as 1984.
If AMC workers go along, they will join a host of other employees who have accepted less generous compensation packages to protect their jobs. For example:
* Ford Motor Company employees at four plants have accepted working-rule changes designed to lower the company's production costs.
* Chrysler Corporation workers have made wage and benefit concessions to the ailing automaker worth $1.07 billion over three years.
* Steelworkers at the A. O. Smith Corporation have given up a cost-of-living adjustment for a year to help the concern be a more competitive bidder for car frame contracts.
* Conrail employees have gone along with a plan to defer future wage increases.
* Firestone workers in Memphis have given up premium pay for weekend work.
Analysts say union acceptance of changes during the life of a contract signals a move away from pattern bargaining. In such bargaining, a company-wide agreement negotiated at one firm, like General Motors, sets the pattern for an industry or several industries.
''Pattern bargaining has broken up,'' says Conference Board economist Audrey Freedman. She predicts that labor negotiations in the next several years will focus more on ''the profitability and market position of the (individual) company or even a product line,'' rather than on the deal workers get at a few big firms.
By tying labor costs more closely to market realities, US goods could become more attractive in world markets, analysts note. And management's desire to win back market share which has been lost to foreign firms is playing a major role in the campaign to win wage and working-condition concessions. ''Foreign competition is a key motivation in what is going on,'' says Hyman Kornbluh, director of the Labor Studies Center at the University of Michigan.
Especially in the auto industry, ''the leverage management is using (to win concessions) is that if workers do not agree, manufacturers will go to an outside plant or have the product made abroad,'' says Edward L. Cushman, a Wayne State University professor and former American Motors executive.
In addition to the impact of foreign competition, management's hand also is being strengthened by shrinking capacity in heavy industries. The rubber, steel, and automobile companies, which have been closing plants to reduce excess capacity, are ''the very ones that once were viewed'' as pattern setters for the entire economy, Conference Board economist Freedman says.
Even facing the threat of unemployment, not all workers are willing to make concessions. For example, Ford asked employees at its Sheffield, Ala., aluminum casting plant to take a 50 percent wage and fringe-benefit cut to keep the plant in operation. The request was turned down by local union leaders.
''Only Ford's national council can reopen a (wage) agreement,'' notes Jerry Dale, assistant public relations director for the UAW.
Union officials in Sheffield now are now talking with Ford about having the workers buy the plant.
Contract concessions are an extremely sensitive matter for union leaders, who stay in office by promising more and more rather than less. The unions will continue to make concessions only grudgingly and to minimize their impact. UAW spokesman Dale argues that while recent working-rule changes provide ''some savings to the companies, there is not a great deal of money involved'' for the union's membership.
Still, even union officials seem to sense a change in the bargaining climate. ''We are not going into (1982 negotiations) with the idea of concessions,'' union spokesman Dale says. ''But there is no question we will have to negotiate within the realm of economic reality.''