Unionized Employers Head Into Contract Talks With Confidence

What goals and expectations do employers have for collective bargaining in 2017? We’ve conducted annual research on that subject for more than three decades, so let’s dip into Employer Bargaining Objectives 2017 and take a look at the latest results. 

When asking employers about upcoming contract talks, it was hard to find any that lacked self-assurance. Most of the surveyed employers are either "very confident" (25 percent) or "fairly confident" (68 percent) of reaching their bargaining objectives, even as labor unions push for better pacts in a positive economic environment.

Wages are the only area where more than half of employers anticipate making concessions. In fact, about two-thirds of management representatives (66 percent) said they expect to make wage concessions in 2017, which is similar to the level recorded prior to the financial crisis, when 70 percent of employers preparing for 2007 contract talks indicated a willingness to give ground on wages.

Nevertheless, employers have kept contractual pay increases fairly subdued throughout the recent period of economic recovery, and it appears that management negotiators will once again pursue modest increases in 2017. The most popular bargaining position will be to push for first-year wage hikes in the range of 2 percent to 2.9 percent, cited by 55 percent of employers.

Raises aren’t a certainty, however, as 11 percent of employers said they'll seek a first-year wage freeze in 2017. 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.

To hold down the costs associated with union pay scales, employers have increasingly embraced two-tier compensation systems in which new hires receive lower pay rates than more senior employees. These dual-pay plans appear in 37 percent of the surveyed employers’ existing contracts, up slightly from 31 percent in 2016.

The growth of two-tier compensation structures appears poised to continue, with 39 percent of management representatives indicating that they will bargain to keep or add two-tier plans in the contracts they negotiate in 2017. This is nearly double the figure from five years ago (21 percent). Moreover, the share of management negotiators bargaining for permanent dual-pay systems exceeds the share seeking a temporary two-tier structure by about a two-to-one margin.

The drive to control costs also affects employers’ bargaining stance on other issues. This is particularly true with respect to the health-care provisions contained in union contracts, which is an area where 61 percent of management negotiators are looking to gain concessions. For example, more than four in 10 employers (43 percent) plan to add or increase employee cost-sharing in the form of premium contributions, while about three in 10 will seek to add or increase deductibles and co-payments (31 percent and 29 percent, respectively).

The research also provides details on current contract terms and bargaining goals in other areas, such as paid leave and miscellaneous benefits, retirement plans and job security provisions.

Employer Bargaining Objectives 2017 can be ordered on its own, and it's also one of several research reports included with Bloomberg BNA’s HR Decision Support Network. Start your free trial today!