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Winning Health Benefit Concessions Remains Top Employer Priority; Cost-Sharing Provisions Targeted in 2006 Contract Talks

NEWS RELEASE

Contacts:
Karen James Cody,
BNA - Press Contact

Washington, DC (January 24, 2006) – When asked where they would most like to gain union concessions in 2006 contract negotiations, two-thirds of surveyed employers (67 percent) identified health care/insurance benefits, according to BNA's 21st annual Employer Bargaining Objectives™ survey report.

Health care provisions on cost-sharing in new contracts will be a leading target, the survey shows. Though most covered workers already contribute to health insurance costs through co-payments, deductibles, or premium contributions, more than three in five employers will bargain to either increase workers' existing payments (48 percent) or add new cost-sharing provisions (14 percent) in 2006.

"These numbers bring some perspective to employers' intent to control health care costs," said Joshua Joseph, research director at BNA, Inc. "In broad terms, no other area - whether wages, pensions and retirement, job security, or paid leave benefits - comes close as a priority for gaining concessions."

Related findings from the 2006 bargaining survey include:

Manufacturing firms are among those most likely to consider cost sharing increases for health benefits. About seven in 10 manufacturers (69 percent) plan to bargain for higher employee health care contributions in the form of co-payments, deductibles, or insurance premiums. The comparable figure for nonmanufacturing entities is 40 percent.

In addition to cost-sharing increases, some employers will look to trim related health/insurance benefits. Health provisions most commonly targeted for cuts include prescription drug coverage (28 percent), doctor visits (25 percent), hospital coverage (22 percent), and surgical coverage (21 percent).

Employers will seek union concessions in a variety of areas beyond health care. Other areas that top employers' lists for winning concessions include pensions/retirement (29 percent), wages (28 percent), job security (17 percent), and paid leave benefits (16 percent). As noted previously, health care/insurance led all priority areas (67 percent).

Many employers appear willing to give ground on wages. When asked where they would consider making concessions to unions in 2006 contract talks, nearly six in 10 employers (58 percent) chose wages as the top area. This figure far outstripped other choices for giving ground, including pensions and retirement (24 percent), paid leave benefits (20 percent), health care/insurance (19 percent) and job security (14 percent).

Employer wage proposals for 2006 contracts will be in line with those offered last year. For the first year of their new contracts, 40 percent of the surveyed employers will propose wage increases of 3 percent or more, unchanged from last year. Over the life of the contract, however, the 2006 survey reveals that 32 percent of employers will propose wage increases averaging at least 3 percent per year, a drop from figures reported in 2005 (37 percent).

Other wage provisions will be less common in 2006 contracts. The prevalence of employers planning to include lump-sum payments, ratification bonuses, and two-tier compensation systems in 2006 contracts has declined compared with recent years.

Paid leave benefits are lesser targets for cutbacks this year than last. Employers willing to add or increase paid leave benefits in 2006 (17 percent) balance out those seeking to reduce or eliminate such benefits (17 percent). By contrast, employers seeking to reduce paid leave benefits in 2005 outnumbered those willing to improve such benefits by a two-to-one margin.

Fewer employers plan cutbacks in job security provisions. Eighteen percent of employers will seek to cut job security provisions (e.g., recall rights, subcontracting restrictions) in 2006, while 20 percent will consider adding or improving such provisions. Last year, employers seeking cuts in this area (29 percent) outweighed those looking to introduce or strengthen related provisions (20 percent)

Outsourcing and using temporary or contract workers will remain key bargaining issues for some. About one in three surveyed employers (34 percent) expect the use of temporary, contingent, or contract workers to be an issue in 2006 contract talks. About a quarter of employers (24 percent) say they will bargain to reduce or eliminate restrictions on subcontracting. Both figures are in line with those reported last year.

Further details and breakdowns are contained in the full report. Press copies available to working journalists: contact Karen James Cody at presscontact@bna.com. All others please visit http://www.bna.com/promotions/emplbarg or call BNA PLUS at 800-452-7773 (202-452-4323 in Washington, D.C.) for more details and ordering information.

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The Survey Sample : Labor relations professionals from 102 U.S. employers responded to the survey between Oct. 6 and Nov. 14, 2005. Represented in the sample are manufacturers (26 percent), services/nonmanufacturing companies (37 percent), and nonbusiness entities (36 percent), such as health care facilities, educational institutions, and government agencies. Twenty-six percent of the surveyed employers are negotiating with bargaining units covering 1,000 or more workers, while 74 percent are negotiating with units of fewer than 1,000 employees.

BNA, Inc. is the largest independent publisher of news and information for professionals in business and government. Based in the Washington, D.C., area for more than 75 years, BNA's print and electronic products address the full range of legislative, regulatory, and economic developments affecting business. Through survey research, expert analysis, and in-depth reporting, BNA's HR services continue to advance the understanding and practice of human resources within organizations. Visit BNA at www.bna.com