Crucial year for unions

By Susan Hooper
Advertiser Staff Writer

Click the image for a list of affected industries.

The negotiations will be intense, with hotels suffering from deep revenue losses since the Sept. 11 attacks and unions concerned about preserving jobs and benefits in an uncertain economic climate.

But the seven Waikiki hotels are just one set of Hawai'i employers negotiating with unions this year.

Labor contracts with workers in five major industries expire between now and the end of November, and union and business leaders in areas as diverse as longshore and health care will be crafting proposals and counterproposals.

The talks come at a tough time, as Hawai'i's economy struggles to recover both from the effects of the Sept. 11 attacks and a full decade of economic doldrums in the 1990s. Employees and employers statewide have been hit hard, with more than 50,000 workers filing for unemployment since Sept. 11 and hundreds of businesses either forced to close or scrambling to regroup with fewer customers and a drastic drop in revenues.

Analysts say both unions and management have a strong incentive for working cooperatively this year, because turmoil in labor-business relations can only further chip away at Hawai'i's already fragile economy.

Yet a bitter economic climate can make for the toughest negotiations, because workers' financial needs often increase while employers have little to offer, experts say.

"It's often more difficult to arrive at an agreement when economic conditions are poor," said Tim Ho, president of the Hawai'i Employers Council, which represents many businesses in union negotiations. "Employers are trying to sustain their businesses and protect their businesses. It's really a survival situation. Unions, by the same token, are trying to protect jobs. ... The unfortunate part about it is that each of their respective objectives sort of runs counter to what the other is trying to do.

"Security from a union standpoint has a cost to it (for employers). And reducing costs from the employers' standpoint erodes security. So it's clearly not a good time."

Among those whose contracts expire this year, in addition to the Waikiki hotel workers, are employees at several Neighbor Island hotels, nurses at Hawai'i's five largest healthcare operations and longshore, construction and pineapple workers. Several of these contracts come up every three years; this year the construction workers' five-year contracts also expire, Ho said.

Complicating the labor negotiations picture, union employees with Hawaiian and Aloha airlines are being asked to merge seniority lists and accept new contract terms as part of the airlines' planned merger, which is expected to conclude by mid-year. Those negotiations are likely to be heated, not only because of the contract talks, but because seniority is a key issue for airline employees, determining everything from pay and some benefits to who gets laid off if the new carrier is overstaffed. In addition, many Hawaiian employees oppose the merger and formed a grass-roots group to voice their concerns.

Hawai'i's interisland carriers say the merger and cost-cutting are needed, or they may not be able to survive. But analysts say the new airline must make its union workers happy or face serious service problems with customers. Previous airline mergers have nearly foundered because of disgruntled employees.

"They hold all the cards," said Raymond Neidl, an airline analyst with ABN Amro Securities LLC in New York, of the two airlines' unionized work forces. "The negotiations will be tough."

Of the unions renegotiating contracts this year, each industry has its own concerns. But they share several key issues likely to dominate discussions at the negotiating tables. Among these are preserving medical benefits in the face of sharp increases in premiums, better retirement benefits for an increasingly gray work force, wage increases, and job security in an era of layoffs, non-union subcontracting and sales of businesses to owners from outside Hawai'i.

Several unions also have concerns about company pressure for increased productivity from remaining employees following layoffs.

Businesses, meanwhile, will be searching for more ways to pare costs and make their operations more efficient, in some cases through technology improvements that may take away workers' jobs.

"The situation in various hotels is more economically delicate," said Eric Gill, financial secretary-treasurer with the Hotel Employees & Restaurant Employees Union, Local 5, which represents workers at the Waikiki hotels where talks are beginning. "There's a little bit different footing on the other side of the table for these negotiations. We're also affected by it — a lot of people are still laid off. What it means is these negotiations will be different, maybe not in form, but in the underlying issues, than previous ones."

Union strength

Unions have a number of advantages in negotiations this year, analysts say. Chief among them may be the vulnerability of most Hawai'i employers to a strike.

"The cost of a conflict, when they're unable to earn money now, would be extremely high," said Lawrence Boyd, labor economist with the Center for Labor Education and Research at the University of Hawai'i-West Oahu. "A strike or something like that would severely cripple their revenue, because they're desperate to make revenue. And the cost of a strike would be much higher in that situation."

Boyd points to the recent settlement between United Airlines and its mechanics as evidence that companies — especially those severely affected by the events of Sept. 11, as United was — are not able to sustain a strike these days.

Two weeks ago, United mechanics rejected a contract offer from the company and authorized a strike. Both sides then returned to the bargaining table and reached a tentative agreement in just four days, with United satisfying several union concerns such as increased pay and benefits.

Some Hawai'i unions also expect to receive help this year from their Mainland counterparts.

The Hotel Employees and Restaurant Employees International Union won a contract in December for employees at nine Boston hotels that included fully paid for health insurance, increases in wages and benefits over five years averaging five percent a year, and a clause that requires any new hotels acquired by the hotels' parent companies to allow their workers to become part of the union. There were no concessions on the labor side, according to the union.

Boston hotels have suffered financially since the September attacks; the hotel workers had voted to authorize a strike if a new contract was not accepted.

Gill, of Local 5, said he went to Boston in December to support the hotel employees' contract work, and the Boston local is "returning the favor" by lending him a key staffer to help in the Waikiki talks.

"We are very conscious that these are global corporations," Gill said of the hotel owners. "The negotiations that take place here or in any other city are not purely local."

Management's perspective

As talks begin this year, management has its own set of bargaining chips, analysts say. Although the economy makes businesses more vulnerable to a strike, the union rank and file may be more wary of voting for a job action, since so many people lost work following the September attacks.

United mechanics in Hawai'i, for example, voted to accept the company's original contract offer and were split 50-50 on authorizing a strike against the company, mechanics' union officials here said.

"If I were an employee sitting here, I would think this is one of the worst times to engage in a job action, because it's better to have a job right now," said Richard Rand, a Honolulu employment lawyer who represents businesses in labor contract negotiations. "There are just not a lot of jobs out there. People who have jobs would be better off trying to keep them and negotiate and hope for a better time."

Management also has key statistics on its side. Raises in many contracts are tied to the rate of inflation, but the latest figures for Honolulu show consumer prices up a scant 1.2 percent in 2001.

"There's still somewhat of a mentality that if it's not an absolute crisis, it's very difficult for a union to accept the idea of a flat contract, or concessions, or a very small increase," Rand said. "But if you were to just look at inflation, ... those numbers don't justify big increases."

The weak stock market also argues against generous settlements by companies this year, Ho said.

"In the 1990s what propped many organizations up was the red-hot stock market," he said. "And it was artificially high, perhaps, but that helped to mitigate businesses' operational losses or the difficulty the economy brought here in Hawai'i, which was very different than what was happening in the rest of the U.S. Now you have a situation where the market is bad and the economy is bad."

In spite of their differences, union and management representatives described some similar goals for contract talks this year.

They want to reach consensus more quickly than they have in the past, when negotiations have dragged on for months in some cases. And they are considering agreeing to re-open contracts to discuss wages and other benefits if the economy improves.

Union leaders are looking for new ways to compromise on demands, saying they realize, for example, that skyrocketing medical premiums make it impossible for some employers to offer full coverage while also agreeing to wage and pension benefit increases.

"Sometimes you have to make those hard choices," said Eusebio Lapenia Jr., president of the International Longshore and Warehouse Union, Local 142, which represents pineapple, longshore and Neighbor Island hotel workers.

And businesses may agree to improvements in working conditions that do not greatly affect their bottom line, because this year they may have little else to offer.

Both sides agree that they may be adversaries on many points, but they also have a common enemy.

"With the challenges we face, we just hope the economy gets better," Lapenia said, "so businesses need more people to work."