Abstract
Concession bargaining is the mirror image of conventional collective bargaining as employers act and unions react, rather than the reverse. Concession bargaining is shaped more by the employer’s ability to pay than by the other factors brought up at the bargaining table such as changes in the cost of living or labor productivity. The basic assumptions of concession bargaining are employer credibility (that employers have made credible cases of hardship); the quid pro quo (that the union gets something (usually job security) in return for what it gives (usually lower wages and benefits)); and a sense of “for this time only” (that concessions are made only once and not repeated). Concession bargaining is discussed in terms of wage freezes and cuts, two-tiered wage systems, the duration of collective bargaining agreements, health care benefits, pensions, and work rules.
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Notes
- 1.
- 2.
For example, in a case discussed later, there was criticism of a company that demanded concessions without the proper justification. Workers walked out in a strike at the Mott’s apple juice plant in upstate New York after the company demanded a $1.50 wage cut and a freeze in pensions, not because the company was doing poorly (actually it was profitable) but because the company simply felt that less was being paid in the area and that its compensation costs should be brought in line. The company claimed that it only wanted to be more profitable (Greenhouse 2010).
See Bell (1995) for a discussion of the strong links between individual firm performance and negotiated concessions—concessions were less likely in firms with above average performance.
- 3.
Bunkley (2010a) wrote that UAW Local 1112 in Lordstown, Ohio had a reputation as a militant union opposing concessions negotiated by their national union with General Motors in the 1980s; but it approved a contract granting major concessions in work rules in 2008. Apparently, members of the local became less hostile to concessions when they saw the damage that foreign competition did to the financial health of their employer and the possibility that GM would soon be bankrupt. Job security became their highest union concern because the company had made a credible case of hardship (Bunkley 2010a, b).
- 4.
Cappelli (1985, 91) saw the exchange relationship as a key facet of concession bargaining and concluded that “unions may moderate labor costs through concession bargaining if jobs are threatened and if such moderation is likely to generate a clear improvement in employment security.” For a description of trade-offs during concession bargaining see Bureau of National Affairs (1982).
- 5.
In their study of the workers’ approval or rejection of collective agreements with concessions (wage freezes, the elimination of a traditional wage increase, postponement of cost of living allowances, and the elimination of all personal holidays) negotiated between the UAW and General motors, Kaufman and Martinez-Vazquez (1988) found that workers in plants with large layoffs voted in favor of the concessions only if they believed that concessions would save their jobs.
- 6.
In his review of concessionary settlements, Alvarez (2010) found that slightly more than half of bargaining unions agreed to wage and benefit reductions, and slightly less than half agreed to wage and benefits freezes.
- 7.
For example, one collective agreement described in the BNA’s database Collective Bargaining Agreement Settlements in October 2005 was a 4-year agreement in manufacturing with no salary increase but with a $6,000 signing bonus. In contrast, another agreement in manufacturing signed 2 years earlier was for 3 years with no wage increase for the first and second year, a 15 cents per hour raise in the last year, and a $300 signing bonus.
- 8.
- 9.
For example, in 2003, a collective agreement was ratified at Verizon that provided a lump-sum payment instead of a wage increase in the first year of a 5-year agreement, 2 % wage increases for each of the next 4 years, and, for the entire agreement, protections against layoffs and involuntary transfers for present workers but not for newly hired workers (the lower-tier workers) (Greenhouse 2003).
- 10.
For example, in a bargaining proposal for county deputy sheriffs in California, newly hired workers (the lower tier) would have to work 5 more years than regular workers (the higher-tier workers) to receive maximum retirement benefits (Edwards 2010).
- 11.
For example, in the collective bargaining agreement between the National Association of Letter Carriers and the U.S. Postal Service for 2006–2011, the section on duration reads “Unless otherwise provided, this agreement shall be effective November 1, 2006 and shall remain in force and effect to and including 12 midnight November 20, 2011, and unless either party desires to terminate or modify it, for successive annual periods. The party demanding such termination or modification must serve written notice of such intent to the other party not less than 90 days or more than 120 days before the expiration of the Agreement” (National Association of Letter Carriers 2006, Sect. 2.2).
In the industries covered by the Railway Labor Act of 1926 (the railroads and the airlines) collective agreements do not have fixed expiration dates, but rather they have amenable dates. After the amendable date, the contract remains in force until a new agreement is reached (Nordenflycht and Kochan 2003).
- 12.
For example, the basic collective agreement of the Major League Baseball Players Association for 2007–2011 has a clause that simply states “The agreement shall terminate on December 30, 2011” (Major League Baseball Players Association 2007, Article XXVI).
- 13.
Alternatively, a wage reopener may be negotiated and become part of the initial settlement. For example, one agreement in the BNA’s database was for 5 years, with a 4 % increase in the first, second, and third years with the contract then to be reopened for wage negotiations after another year. Another agreement for 4 years had wage increases in the first 3 years and was reopened for the negotiations of both wages and benefits in the last year (Bureau of National Affairs 2010).
- 14.
- 15.
For the advantages and disadvantages of defined contribution and defined benefit pension plans see Lewin et al. (2011, 11–12).
- 16.
An analysis of employer attempts to control the growth of pensions found that the most common employer approach was to change the basis for calculating a pension, for example moving from a 3-year average of an employees’ highest salary to a 5-year average (Phaneuf 2011).
- 17.
Jacobs (2009) called two-tiered pension plans “soft freezes” when plans are frozen for lower-tier workers while contributions continue for higher-tier workers. In contrast, “hard freezes” end contributions for all employees.
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Chaison, G. (2012). The World of Concession Bargaining. In: The New Collective Bargaining. SpringerBriefs in Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-4024-6_2
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