The second week of negotiations on a new contract between GE and its two largest unions, CWA-IUE and UE, ended on Thursday with the two sides still far apart. GE contends that it must reduce benefits and keep a lid on wage increases if it is to remain viable in a “brutally competitive market.”
The unions are proposing changes that will improve benefits and end the company’s two-tiered wage system. They argue that degrading worker benefits and keeping wages stagnant as GE proposes ensures that workers will not share the fruit of the their productivity gains that have made GE investors and management billions of dollars in profits.
One thing that these negotiations have made clear is that no group of workers can remain unaffected by what happens to other workers. What happens to new hires affects workers already on the job, what happens non-union workers affects union workers, what happens to private sector workers affects public sector workers and vice versa, and what happens to workers abroad affects workers in the US. In other words, an injury to one is, in fact, an injury to all.
Take for example what has happened to worker retirement security. Between the 1950s and 1990s, most large and medium sized firms in the US offered employees a defined benefit pension, which guarantees a regular pension payment based on years of service and average salary. Beginning with non-union IBM in the 1990s, companies began taking away defined benefit plans and replacing them with defined contribution plans like 401(k)s that guarantee nothing and whose value depends on the ups and downs of the stock market.
One of GE’s proposals is to phase out its defined benefits pension by eliminating the benefit for new hires. At the negotiations, an expert hired by GE to present its case, said that a guaranteed pension was an old fashioned benefit and that the trend in today’s modern business world is toward replacing defined benefit pensions with defined contribution plans. The trend, he said, was being followed by GE’s competitors and even by public sector employers.
A CWA-IUE representative responded that this trend didn’t just happen. It began when corporate America began systematically dismantling its pension plans in order to seek more profit. “The trend,” he said. “Is to take away all the protections of a situation (corporate America) in fact caused–all for profits, banks, and Wall Street speculation that culminated in the 2008 crisis.”
Both UE and CWA-IUE representatives said that they would resist efforts to exclude new hires from the defined benefits pension and other efforts by the company to solidify and expand its two-tiered compensation system. “How can you expect a new hire making between $14 and $20 an hour to be able to save for retirement with no defined benefit plan,” said one CWA-IUE representative.”
The union also pointed out that if new hires were no longer contributing to the defined benefit plan, funding for the plan would erode, resulting in a pension freeze or even in pension reductions for those remaining in the defined benefit plan. Furthermore, the defined benefit plan is not a strain on GE’s profits. It made $15 billion in gross profits in 2010 and has not made any contributions to the defined benefits plan since the late 1980s.
In order to contain rising health care costs, the company also wants GE workers to accept a new high deductible health plan, called GE Health Choice, that it imposed on non-union salaried workers in January. This plan would shift more health care costs to GE workers. UE International Representative Gene Elk replied that GE has overstated its health care costs, noting that a study by the Kaiser Family Foundation found that GE’s health care costs were much lower than the national average.
He also pointed out that GE employees who were forced into the high deductible health plan are unhappy with the new plan. Two UE members whose jobs give them the opportunity to interact often with salaried employees, said that the salaried employees they knew had nothing good to say about the plan. Elk also said that GE had promised to share the results of a satisfaction survey that the company took regarding the high deductible health care plan but so far has not done so.
When the bargaining session adjourned on Thursday for the weekend, most union representatives headed for Erie, Pennsylvania where a Coordinated Bargaining Committee rally will be held on Saturday June 4 to show solidarity among GE workers for a new contract that protects and expands benefits and wages.