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Odds are against another grocery strike in Southern California

Since early this year, there has been talk of another grocery strike in Southern California, but the threats have become more strident recently, after the union voted to reject the latest offer from the chains. Although the members had already authorized a strike back in April, the latest vote was characterized as another vote to authorize a strike. The two sides have returned to the bargaining table this week, however, and the union has not declared that a strike is imminent. Will this dispute lead to a walkout similar to the last strike in 2003, which lasted four months and devastated both sides? It’s highly unlikely, because both sides must recognize that it would be a mutual suicide pact. If the union does walk out, chances are they’ll be back to work in a few days.

Cost sharing for health care premiums is the sticking point, as it was in 2003, when the companies insisted that employees pay a small portion of the premiums. The union refused and ultimately struck. The compromise that settled the strike was adoption of a “two-tier” system. Employees hired before 2004 would not have to contribute, but anyone hired thereafter would. When the contract was renegotiated in 2007, this framework was essentially left in place. While an increase in the employee premium contribution has been proposed in the current negotiations, the real heart of the dispute is whether the grandfathered employees will have to start paying a portion of the premiums. The union is committed to preserving the “free” benefits for the employees who went through the strike, though publicly, the union is railing against the amount of the proposed contribution increase, which keeps the portion of the membership hired after 2004 fired up.

Most difficult contract negotiations only get settled when the pressure on both sides reaches critical mass. The negotiations haven’t reached that point, because the companies haven’t made their last, best and final offer (essentially take it or leave it) yet, and the union hasn’t given notice of their intent to strike. The union took the company’s latest proposals to a membership vote just to maintain the credibility of their previous strike threat and increase the pressure on the companies. Both sides are still posturing, they haven’t yet reached the point where the fear of the consequences of failing to reach a deal forces them to reveal their true positions and reach a compromise.

Would the companies take a strike over the principle that all employees should contribute something toward the health care premiums? Not with Fresh and Easy, Costco, Trader Joe’s, and their biggest competitive threat, Target, poised to take even more market share. They are likely using the proposal as leverage to obtain as many concessions as possible, but in the end, the costs of a lengthy strike outweigh the amount that would be contributed by the grandfathered employees, at least in the short term.

On the other hand, would the union strike over any proposed increase to the current premium contributions for employees hired after 2004? While a large number of the current employees didn’t experience the 2003 strike, the leadership knows it was disastrous for both the union and the members – and the current economic climate makes it far more risky for the members to walk out now. If the companies drop the proposal on grandfathered employees in return for some premium contribution increase, the union will most likely take the deal.

The odds are a last minute deal will be reached to avert a strike. However, either side could miscalculate and push too far – the companies, by insisting that the grandfathered employees pay, or the union, by rejecting any increase to contributions – and a strike could ensue. Even in that scenario, it’s very likely a deal will be reached after a few days, because neither side can afford a repeat of 2003.

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