Labor Relations Directors Expect Success in 2018 Contract Talks

What goals and expectations do employers have for their upcoming round of collective bargaining? We’ve conducted annual research on union contract negotiations for more than three decades, so let’s dip into Employer Bargaining Objectives 2018 for the latest results. 

No Lack of Confidence

The labor relations directors who were surveyed this year continued a decades-long trend of heading into contract talks with a positive outlook about achieving desired outcomes. Most are either "very confident" (29 percent) or "fairly confident" (62 percent) that their organization will come away from the bargaining table with an agreement that reflects management’s goals. 

A majority of employers (62 percent) plan to replace their expiring pacts with new agreements that last three years. This is typically the contract duration most favored by management negotiators. 

Longer contract durations are less common, with 14 percent of employers expecting to negotiate four-year contracts, and 13 percent expecting to negotiate five-year pacts. Even fewer employers will seek contracts lasting less than three years. Only 2 percent expect to negotiate a one-year pact in 2018, while 8 percent expect to negotiate a two-year agreement. 

Give on Wages, Gain on Health Care

As is often the case, the top area where employers expect to make concessions is pay. In fact, the share of management representatives indicating a willingness to give ground on wages far outstrips the proportion saying they expect to gain wage concessions in 2018 contract talks (60 percent versus 24 percent). 

The top area where employers will negotiate for more favorable terms in their new contracts is health-care and insurance benefits, which also tracks with findings from previous years. The gap is quite pronounced between the percentages of employers looking to gain rather than make health-care concessions in 2018 (65 percent versus 20 percent). 

Keep Pay Hikes Subdued

Unionized employers have largely succeeded in their efforts to keep contractual pay hikes from ballooning in recent years. And it appears they will once again pursue moderate increases in 2018, with a combined 64 percent of establishments seeking first-year wage adjustments in the middle ranges of either 2 percent to 2.9 percent or 3 percent to 3.9 percent. 

Employers' expectations for wage adjustments over the life of their new contracts track closely to the findings on first-year increases. Almost two-thirds (63 percent) of the surveyed labor relations directors plan to seek wage increases that average somewhere in the range of 2 percent to 3.9 percent per year. 

Larger increases are rare but not unheard of. In 2018, 5 percent of the surveyed employers are planning for average wage adjustments of 4 percent to 4.9 percent over the life of their new contracts, and another 2 percent are planning for wage adjustments over term that average at least 5 percent per year. 

Raises aren’t a certainty, however, as 11 percent of employers said they'll seek a first-year wage freeze in the collective bargaining agreements they negotiate this year, and 6 percent said they are planning to keep wages flat over the life of their new contracts. 

This is consistent with figures reported the last few years but represents a considerable decline from levels seen during the depths of the Great Recession. In 2010, for example, about one-third of employers (32 percent) sought first-year freezes, and another 10 percent planned to bargain for wage cuts. 

Contain Benefit Costs

When unionized employers look for ways to contain the growth of wage and benefit costs, they frequently home in on health-care and insurance benefits. For example, 39 percent of the surveyed employers plan to bargain in 2018 for an expansion of existing requirements that shift some responsibility for health-care expenses to employees, and another 9 percent will seek to add new cost-sharing provisions. 

Contract provisions aimed at containing health-care costs are already widespread: 

  • 77 percent of expiring contracts provide for deductibles, which are the thresholds for out-of-pocket expenditures that employees must reach before the health plan pays toward allowable charges;
  • 76 percent provide for copayments, which are relatively small amounts individuals must pay each time they access covered services; and
  • 72 percent provide for premium contributions, which are periodic payments employees typically make via payroll deduction in order to maintain health plan enrollment.

A more detailed breakdown of upcoming bargaining plans related to cost-sharing provisions reveals that 41 percent of employers will seek to add or increase employee premium contributions, 32 percent plan to bargain for new or increased employee deductibles, and 29 percent want to add or boost employee copayments. 

The full report also covers several other areas, such as retirement benefits, paid leave, and job security provisions. Click here for ordering information. 

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