Counterparties: Imposing pay cuts on unions
Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com
ArcelorMittal, US Steel and Caterpillar each want to push labor costs lower — and that might well mean pay cuts, even for unionized workers. It’s all part of a trend that even the most well-organized unions haven’t been able to alter: “Wage and salary income… has fallen steadily from close to 55% of GDP in the early 1970s to less than 45% today”, writes Edward Alden.
According to documents reviewed by the WSJ, ArcelorMittal is offering union workers a 36% pay cut and the elimination of retiree healthcare benefits for new workers. US Steel is likely pushing for cuts as well, although a similar specifics aren’t available. And Caterpillar is living up to its reputation for hard bargaining with labor, asking 780 workers to take a six-year pay and pension freeze.
In response, workers at Caterpillar went on strike. That, however, is a measure that has lost its former force:
Labor experts say that leverage has shifted to owners, who are increasingly willing to close unprofitable operations or bring in replacement workers… ”The strike is a weapon of the past,” said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass.
If that’s the case, Robert Bruno, a labor relations professor at the University of Illinois, wonders “how can you counter a powerful multinational in this economy?” Eduardo Porter thinks the answer to that question is to move beyond “organizing work site by work site… Instead of negotiating for their members only, unions might do better pulling for better wages and conditions for all workers”. Acting globally, as Felix has advocated before, would be a good start to implementing Porter’s idea. Unite Here appears to agree: The union is calling for a global boycott of Hyatt Hotels. – Ben Walsh
On to today’s links:
Mario Draghi’s secret weapon: the ECB’s “risk control framework” – Forbes
Geithner: Euro crisis has caused “huge, really remarkable levels of deprivation” – Charlie Rose
Moody’s downgrades German outlook to negative – WSJ