Supermarket Strike

The Parties
After the expiration of the predecessor agreement on October 5th, employees at Vons and Pavilions (Safeway) went out on strike on October 11th. Albertsons and Ralphs (Krogers) then locked out their employees who are represented by seven (7) locals of the United Food & Commercial Workers (UFCW). The companies and the UFCW agreed in August that a strike against one would be a strike against the others and the companies retained the right to lock out their employees.

Number of Employees & Stores Affected
More than 70,000 employees, in more than 852 stores in Southern California have been affected. Employees turned out in unprecedented numbers (over 80%) and voted overwhelmingly (over 95%) to authorize a strike against the stores. The last strike in 1978 against Ralphs and Vons lasted four (4) days.

Unemployment Compensation & Health & Pension Contributions
None of the striking or locked out employees have received unemployment insurance as the State denied coverage. The companies stopped making contributions to their health and pension plans the day the strike began.

Companies' Position
The companies are insisting that current employees start to contribute towards the cost of their health care. Currently, employees make no contribution for their medical, prescription drug, dental or vision plans. The companies have proposed a weekly contribution of $5 for the employee and $15 for a family.

The companies are also proposing to increase over three (3) years their contributions to the health plans by more than the 40% and their pension contributions by 57%.

New Employees
New employees, however would be required to pay more for their medical coverage as the companies are proposing to cut and cap their hourly contributions. In addition, the top hourly rate for a newly hired clerk would be reduced from $17.95 to $15.10. The progression to the top rate would take five (5) years instead of two (2) years for current employees. There also would be reduction in the pension benefit.

Union's Objections
CFCW is concerned about this two (2) tier wage and benefit structure for several reasons. First, as new hires replace the current workforce, the existing jobs would over time come without any meaningful benefits and the average salary for a full time Clerk would decline by more than $6,000 per year. Secondly, current employees would be required to pay much more for their health insurance since the company contributions that have been reduced for new hires would also be segregated from the insurance pool for existing employees.

The union states that ultimately the cost of insurance for existing employees would increase to $95 per week. The companies deny this.

Wage Increases
The companies have proposed two (2) bonus payments over the term of a three (3) year prospective agreement. One of the bonus payments would be payable as of the date the new agreement is ratified.

Competition
The companies respond that Wal-Mart, their principal competitor is planning to open more than 40 super centers in Southern California over the next several years. Wal-Mart pays its employees who are not organized, less money. In addition, other competitors, such as gas station marts and ethnic markets to name just a few are also taking away market share.

Labor Costs as a Percent of Sales
In the Los Ageless Times on Sunday, February 15, James Flanigan reported that while Costco pays very competitive wages and benefits, its labor costs amount to only 7% of annual sales. On the other hand, Wal-Mart and the super market chains, which pay less than Costco, have labor costs as a percent of sales of 12% and 16%, respectively. This is so because both Wal-Mart & the supermarket chains are less productive and have higher turnover rates.

Losses
Safeway has reported it is losing $2 million per day from the strike while a full time employee is losing more than $4,600 in wages and benefits every 35 days.

Binding Arbitration
In an effort to end the strike UFCW offered binding arbitration that the companies rejected. The companies are insisting that the parties are best equipped to resolve the dispute without the intervention of an outsider who would impose a settlement.

Federal Mediation & Conciliation Services
The parties are meeting under the auspices of Peter Hurtgen, Director of the Federal Mediation & Conciliation Services (FMCS).

Stay Informed
If you would like additional information, you can access Ralphs' web site at www.kremployeeinfo.com/socal, or their hot line (800) 615-7279. The union's hot line number is (213) 487-7070, ext. 106.