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Postal negotiations end in arbitration.

For the first time in the 14-year collective bargaining relationship between the U.S. Postal Service and its four major unions, the parties were unable to agree on wage and benefit terms. As a result, their differences were resolved by arbitration panels selected by the parties. (Arbitration was first used in 1981, but only for one of the unions--the Rural Letter Carriers Association.) Bargaining began in April 1984 and continued until the July 20, 1984, expiration of current agreements, when all meaningful negotiations on the major economic issues essentially ended, although the parties were able to agree on some other issues.

The main impediment to settlements was the Postal Service's contention that the employees were overpaid relative to workers holding comparable jobs in the private economy. Accordingly, the Postal Service called for adoption of a two-tier pay system under which new employees would be paid about one-third less than current employees. The Postal Service also pressed for a wage freeze for current employees, adoption of a less liberal automatic cost-of-living pay adjustment formula, adoption of some restrictions on premium pay for Sunday and night work, and additional limits on eligibility for sick pay. The unions demanded a 20-percent wage increase, and vowed not to accept any type of two-tier pay system.

The provision of the Postal Reorganization Act of 1970 for binding arbitration was triggered on October 20 when the stalemate had extended 90 days beyond the expiration date of the prior contracts. The first arbitration award, handed down on December 24, covered 500,000 workers represented by the American Postal Workers' Union and the National Association of Letter Carriers, which had bargained jointly with management.

In its 3-year award, the panel agreed that Postal Service workers' wages had pulled ahead of wages for comparable workers in the private economy, but concluded that the discrepancy should be corrected through a policy of "moderate restraint" of postal workers increases over a number of years. To begin, the panel awarded a 2.7-percent specified pay increase in each contract year.

In arriving at this figure, the panel estimated that consumer prices would rise at a 5.5-percent annual rate during the contract term, and 60 percent (or 3.3 percent) of the rise would be offset by automatic semiannual pay adjustments under the cost-of-living formula, which was continued. This meant that the workers would need a 2.2-percent a year specified increase to stay even with inflation. The panel added to the 2.2 percent a 0.5-percent "improvement factor" equal to one-third of the estimated annual national rate of increase in productivity over the contract term.

The panel also found that substantial compression of the percentage different ial between the lowest and highest pay rates had developed over the years as a result of giving all workers uniform pay increases in dollars. This was partly alleviated by awarding the percentage pay increases and by adding some top pay progression steps for employees in the higher grades (who were found to be slightly underpaid relative to workers in the private economy) and adding some new lower starting steps for workers in the lowest grades (who were found to be substantially overpaid relative to workers in the private economy). To further relieve the pay compression, the panel also excluded workers in the new lower starting steps from receiving the first 2.7-percent pay increase, which was retroactive to July 20, 1984.

Other award terms included a tenth paid holiday (Martin Luther King, Jr's birthday) beginning in 1986; provision for a union-management task force to consider the establishment of a Postal Service health plan; and increased annual allowances for uniforms and work clothes.

Similar provisions were announced by another arbitration panel early in January for 40,000 workers represented by the Mail Handlers Division of the Laborers International Union.

The january award for the 60,000 workers represented by the Rural Letter Carriers differed somewhat from the others:

* It runs for 3-1/2 years, expiring January 20, 1988, instead of July 20, 1987.

* The wage increases in July of 1984, 1985, and 1986 are in the same dollar amounts as those for the other letter carriers, but amount to 2.9 percent instead of 2.7 percent.

* The Rural Letter Carriers will receive a July 21, 1987, specified pay increase equal to half the increase they receive in July 1986. They may also receive an automatic cost-of-living pay adjustment in November 1987. If any specified wage change and cost-of-living adjustment resulting from the 1987 settlements for the members of the other unions for July 1987 to January 1988 total more than that the Rural Letter Carriers receive during those 6 months, the Rural Letter Carriers' pay will be raised to make up the difference.
COPYRIGHT 1985 U.S. Bureau of Labor Statistics
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Publication:Monthly Labor Review
Date:Mar 1, 1985
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