FMCS IMPACT 2006-2007 Pittsburgh Field Office1. FMCS IMPACT 2006-2007 Pittsburgh Field Office2 Federal Mediation & Conciliation Service Impact on Labor-Management.

FMCS IMPACT 2006-2007

Pittsburgh Field Office 1



Federal Mediation & Conciliation Service

Impact onLabor-Management Relations

2006 / 2007



F.M.C.S. Creation

Independent agency under Taft-Hartley amendments in 1947.

Resolve collective bargaining disputes which threaten the free flow of commerce.

Neither a regulatory nor an enforcement agency, but a neutral designed to assist Labor & Management.



F.M.C.S. Mission

Promote sound & stable L/M relations. Prevent/minimize work stoppages through

mediation assistance to parties. Advocate collective bargaining, mediation

& voluntary arbitration. Develop the art, science & practice of

conflict resolution. Foster constructive joint L/M processes.



F.M.C.S. Services

Collective Bargaining Mediation Private, Public, & Federal

Sectors

Relationship Development & Training Customized training

Education, Outreach & Advocacy Of collective bargaining

processes

Alternative Dispute Resolution In-lieu of litigation

Arbitration Services

International Program



FMCS Impact on U.S. Economy FMCS mediation in CBM

disputes saved U.S. workers & businesses $9 billion from 1999-2004 by averting work stoppages

Reduced number of impacted workers by 43.2% (~4.3 million vs. 2.4 million)

Prevented 1,265 work stoppages between 1999-2004.

(Source: EPF 2005 Study)



Collective Bargaining Mediation

2006 U.S. Statistics

23,002 Intake cases 4,486 closed (active) 86% closed/agrmt.

1,632 grievance mediation cases

266 work stoppages (all size B.U.’s)



Work Stoppages(U.S.)

(all size bargaining units)

0

50

100

150

200

250

300

350

400

450

1995 1997 1999 2001 2003 2005

NumberAvg. days



Work Stoppage Trends

Note: Preliminary data from FMCS-commissioned study

100

600

1,100

1,600

2,100

2,600

3,100

3,600

Year

Nu

mb

er o

f W

ork

Sto

pp

ages



Hot Topics at the Table

Job Security Subcontracting Off-shore job losses Technology

Staffing issues Healthcare industry “Foreign” nurse recruiting Construction building trades

Mandatory O/T State legislation

Pension Benefits Defined benefits vs. defined

contributions Two-tier systems “Freezing Plans” (IBM, HP,

Verizon, Alcoa, Motorola)

Health Insurance Active employees & retirees Plan costs & design Co-pays & cost sharing “Fair Share Health Care”

legislation introduced in 31 states



WHY JOB SECURITY ?



JOB SECURITY CONCERNS Continuing decline of

manufacturing sector jobs (GM, Ford)

Bankruptcy escalation

Off-shore job losses mounting

Lower wages overseas attractive to bottom line



Job Security Issues at the Bargaining Table

Competition and cost-cutting are driving the following issues:

Technology Adoption (Jobs lost to automation)

Outsourcing (Jobs contracted out)

Globalization (Jobs move overseas)



Technology

For whom the work gets done

Who assesses the work

How the work gets done

Nature of the work being done

ChangesChanges



Globalization

Goods can be produced anywhere in the world… sometimes for less money.

To compete, employers need to find ways to control their costs.



WHY STAFFING IN HEALTHCARE INDUSTRY ?

Source: Employment Policy Foundation 2005



SOME UNDERLYING CAUSESOF NURSING SHORTAGE

Hospital Acuity “Specialty” demand

continues to rise

Insufficient number of faculty in nursing programs to accommodate enrollment demands

Low retention rates for younger workers

Aging workforce Within 10 years, 40%

of RN’s will be 50 years old or older

½ of working RN’s will reach retirement age in next 15 years



WHY STAFFING IN CONSTRUCTION / BUILDING TRADES?




A Mounting Labor Shortage The NAHB reported in the Builders’

Economic Council Survey in May 2006 that, “every sector of the construction industry is experiencing some labor shortage. The numbers are highest in the need for finished and rough carpenters.”



A Mounting Labor Shortage According to the Home Builders

Institute, the industry employed 6.7 million workers in 2001 and an additional 1.5 million are needed by 2010 just to sustain productivity.

According to the National Center for

Construction Education and Research (NCCER), the average age of craft workers is 47.



WHY PENSION BENEFITS ?



Pension QUICK FACTSQUICK FACTS

Source: BNA 2/2006

90% of CBA’s provide some form of pension and retirement benefits

62% of unionized mfg. & 67% of unionized non-mfg. employers offer traditional defined benefit plan

62% of unionized employers offer tax-deferred retirement savings plan (e.g., 401K)

12% of unionized employers offer a cash balance plan

38% of all union employers offer defined contribution plans

32% of employers will consider pension increases in 2006



Pension QUICK FACTSQUICK FACTS

Source: * Wilshire Associates

Pension plans of companies in the S&P 500 were 92% funded; and in State Retirement plans 81% funded as of 12/31/04. *

Some States with pension fund deficits have attempted to switch from defined benefit plans to defined contribution plans with mixed results:

1. Alaska

2. California

3. West Virginia



The Long Term Threats to Pensions

Source: Bradley Belt, executive director the Pension Benefit Guarantee Corporation, remarks to Federal Reserve Bank of Chicago's Bank Structure and Competition Conference, May 10. 2005

Flawed Funding Rules

Flawed Funding Rules

Underfunding Underfunding

Shift to PBGC Shift to PBGC

PBGC DeficitPBGC Deficit

ERISA doesn’t guarantee safe funding

levels by plan sponsors. E.G: UAL, in

compliance with ERISA, but under-funded

by $10 billion

Level of under-funding in insured single

employer plans is about $450 billionFinancially weak plan sponsors shift

unfunded pension costs to PBGC

PBGC carried a $23.5 billio

n deficit at

the end of 2005



PENSION PLAN DEBATE

Fiduciary litigation

Plan investment returns below expectations

Bankruptcies (Steel, airlines, glass)

PBGC liquidity ($23.5 billion deficit)

Pension Plan “freezes” and “terminations”



WHY HEALTH INSURANCE ?



Health Care Costs and Labor Strife

In 2005, health care costs were a strike issue in 66% of work

stoppages



The Classic Debate at the Table

Who’s covered?

What’s it going to look like?

Who’s going to pay for it?

How much are you going to pay?



The current system involves health expenditures that constitute over 15 percent of Gross Domestic Product

(GDP)

$3,358B

$2,387B

$1,674B

$1,150B

18.4%16.7%

15.3%13.1%

1998 2003* 2008* 2013*

Projected National Health Expenditures and Percent of GDP

Source: Centers for Medicaid and Medicare Services, 2003

* Estimated



Rising Health Care Costs: A National Pain

Cumulative weight of premium increases since 2000 = 87% Cumulative inflation rate since 2000 = 18% Cumulative wage growth rate since 2000 = 20%

Source: Kaiser Family Foundation survey 2006

• In 2000 - Total Annual Premium Family Coverage = $6,438/yr.

• In 2006 - Total Annual Premium Family Coverage = $11,480/yr.



Rising Health Insurance Premium IncreasesRising Health Insurance Premium Increases

Continue to Outpace Earnings and InflationContinue to Outpace Earnings and Inflation



Labor Perspective –Union vs. Nonunion

Average Monthly Employee Contribution

Union employees contribute less, on average, to health insurance premiums than nonunion employees

Source: BLS National Compensation Survey, 2005

Single Coverage

$70.80

$55.71

Nonunion Union

Family Coverage

$282.98

$198.19

Nonunion Union

21% lower 30% lower

Average percent of premium contribution required:

19% 10% 32% 16%



Relationship Development & Training


Active in 2,445 joint training/process cases



Alternative DisputeResolution


1,269 assigned cases

Federal agency ADR contracts, public sector and private sector employment mediations



A.D.R. Growth(U.S.)

0

200

400

600

800

1000

1200

1400

1600

1995 1997 1999 2001 2003 2005

Cases



Common reasons for not reaching agreement

Ineffective communications

Inaccurate info./data

Personalities / emotion

Morals differ

Internal/external political pressure

Un-realistic expectations (economic, status, etc.)

Perception of “Fair”

Pride



WHY USE MEDIATION ?



Why mediation can be an effective tool for conflict resolution

Parties retain control of resolution Voluntary (in most cases) Informal vs. formal process Time efficient Cost effective



Estimated Direct Financial Impact of Work Stoppages by Year




Early FMCS Intervention is Key to ReducingWork Stoppage Duration




When mediation may not be appropriate

Pre-determined, inflexible positions

When a “directed” decision is sought

“Principals”



Federal Mediation & Conciliation Service

Robert S. DitilloCommissioner

One Oxford Centre, Suite 2570301 Grant Street

Pittsburgh, PA 15219412-644-4110

[email protected]



FMCS IMPACT 2006-2007 Pittsburgh Field Office1. FMCS IMPACT 2006-2007 Pittsburgh Field Office2 Federal Mediation & Conciliation Service Impact on Labor-Management.

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