# Presentation: 923262

## Slide 1

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## Federal Mediation & Conciliation Service

- Impact on
- Labor-Management Relations
- 2006 / 2007

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## 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.

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## 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.

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## 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

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## 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)

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## 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)

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## Work Stoppages(U.S.)(all size bargaining units)

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## Work Stoppage Trends

*Note:  Preliminary data from FMCS-commissioned study*

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##   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

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## WHY JOB SECURITY ?

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## 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**

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## 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)

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## Technology 

**For whom the work gets done**

**Who assesses the work**

**How the work gets done**

**Nature of the work being done**

*Changes*

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## Globalization 

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-     Goods can be produced anywhere in the world... sometimes for less money.
-      To compete, employers need to find ways to control their costs.

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**Notes:**
In a global economy, it is important for labor and management to look for creative solutions that allow companies to remain competitive while providing a good working environment

## WHY STAFFING IN HEALTHCARE INDUSTRY ?

*Source:  Employment Policy Foundation 2005*

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## SOME UNDERLYING CAUSESOF 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**
**1⁄2 of working RN’s will reach retirement age in next 15 years**

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## WHY STAFFING IN CONSTRUCTION / BUILDING TRADES?

*Source:  Employment Policy Foundation 2005*

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## 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.”**

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## 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. **
** **

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## WHY PENSION BENEFITS ?

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## Pension QUICK 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**

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## Pension QUICK 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:**
**Alaska**
**California**
**West Virginia**

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## The Long Term Threats to Pensions

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

**Flawed **
**Funding Rules**** **

**Underfunding**** **

**Shift to PBGC**** **

**PBGC 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 billion

- Financially weak plan sponsors shift unfunded pension costs to PBGC

- PBGC carried a $23.5 billion deficit at the end of 2005

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**Notes:**
Flawed Funding Rules:  ERISA establishes funding requirements but fail to guarantee safe funding levels by plan sponsors.  Example:  UAL, in compliance with ERISA, but underfunded by $10 billion 

Underfunding: Current level of underfunding in insured single employer plans is about $450 billion (a substantial increase from the 2002 figure of $10 billion)

Shift Funding to PBGC:  Financially weak plan sponsors shift unfunded pension costs to PBGC 

PBGC Deficit: PBGC carried a $23 billion deficit at the end of 2004.  Agency admits that current prospects for both the airline and automotive parts industries will increase its liability 

## 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”**

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## WHY HEALTH INSURANCE ?

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## Health Care Costs and Labor Strife In 2005, health care costs were a strike issue in 66% of work stoppages

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## 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?**

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## The current system involves health expenditures that constitute over 15 percent of Gross Domestic Product (GDP)

**Projected National Health Expenditures and Percent of GDP**

- Source: Centers for Medicaid and Medicare Services, 2003

- * Estimated

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**Notes:**
Talking Point on Health Care Expenditures: 

The Centers for Medicaid and Medicare Services (CMS), is the government’s source for certain cost trends in health care since CMS funded organizations provide a significant amount of data to CMS that is then used to compile statistics and estimations of health care costs and trends.  In 2003, CMS projected that the U.S. will spend [CHECK NUMBER dollars on health care related expenses by 2013.  That would make health care roughly 18.4% of the gross domestic product in the U.S.  

## 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.

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## Rising Health Insurance Premium Increases

**Rising Health Insurance Premium Increases**
**Continue to Outpace Earnings and Inflation**

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**Notes:**
Talking Point: 

With the increases in expenditures as a percentage of GDP, health care expenditures per capita have increases as well.  In a short 4-year period, the per capita health care expenditures rose 32% from $4670 to $6167.  

## 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**_

_**Family Coverage**_

***21% lower***

***30% lower***

**Average percent of premium contribution required:**

**	****19%****	****10%****	****        32%****	****16%**

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## Relationship Development & Training

- 2006 U.S. Statistics
- Active in 2,445 joint training/process cases

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## Alternative DisputeResolution

- 2006 U.S. Statistics
- 1,269 assigned cases
- Federal agency ADR contracts, public sector and private sector employment mediations

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

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##   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

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## WHY USE MEDIATION ?

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## 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

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## Estimated Direct Financial Impact of Work Stoppages by Year

*Source:  Employment Policy Foundation 2005*

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## Early FMCS Intervention is Key to ReducingWork Stoppage Duration

*Source:  Employment Policy Foundation 2005*

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## When mediation may not be appropriate

- Pre-determined, inflexible positions
- When a “directed” decision is sought
- “Principals”

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## Federal Mediation & Conciliation Service

- Robert S. Ditillo
- Commissioner
- One Oxford Centre, Suite 2570
- 301 Grant Street
- Pittsburgh, PA 15219
- 412-644-4110
- rditillo@fmcs.gov

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## Slide 43

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