Verizon workers get 3% raise as strike ends

01 Jun 2016

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Unionised Verizon workers who had been striking since mid-April will return to work this week after negotiating a healthy pay raise and bonus.

The union leading the negotiations -- Communications Workers of America -- said workers will receive a $1,250 "signing bonus" and a 3 per cent raise. The deal with Verizon must still be ratified by workers.

In total, the nearly 40,000 striking workers can expect a raise of nearly 11 per cent over the next four years and hundreds of dollars in profit sharing payments, the union said.

As part of the deal, Verizon also committed to hire 1,400 new employees, with the vast majority set to be based in call centres on the East Coast.

"We're especially proud of our commitment to 1,400 new hires - high quality and well-paying American jobs," said Verizon's chief administrative officer, Marc Reed.

Most of the employees represented in the labour negotiations work in call centres and maintain the Verizon fibre optic network, called FiOS.

US Labor Secretary Thomas Perez had to intervene as the dispute dragged on.

The main sticking points were over complaints about working conditions, call centre closures, pensions and jobs getting shipped overseas.

The strike was the biggest in the US since an earlier 2011 Verizon dispute.

The labour dispute has taken a toll on Verizon's business. Lowell McAdam, Verizon's chief executive, said earlier this month that it's been harder for the company to sign up as many new customers as before the strike began.

Verizon stock has also lagged behind the broader market as well as peers AT&T and Comcast. News of an impending agreement helped send Verizon stock 1 per cent higher on Friday.

Verizon has had to retreat on some of the major points of contention, including pension cuts and greater flexibility to outsource work.

But after a six-and-a-half week strike, the company also gained some important tools for paring down its work force in the coming years.

''The tentative agreements reached today are good for our employees, good for our customers and will be good for our business,'' Marc Reed, Verizon's chief administrative officer, said in a statement. ''They also include key changes sought by the company to better position our wireline business for success in the digital world.''

Back on track
The agreements reached on Sunday and Monday between Verizon and two major unions will most likely bring to an end the work stoppage, which began on 13 April. The striking members in both unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, must now vote on the agreements. That is likely to happen in the next two or three weeks, and they are widely expected to approve them. They will return to their jobs beginning on Wednesday as part of a short-term ''back-to-work agreement''.

''This contract is a victory for working families across the country and an affirmation of the power of working people,'' Chris Shelton, president of the Communications Workers of America said in a statement.

Verizon had long argued that it needed to cut costs and increase its flexibility to manage its workforce and preserve the competitiveness of its wireline business, which includes landlines, video and internet service that run through wires.

That business, which employs the overwhelming majority of the striking workers, has declined in profitability in recent years as mobile phone service and hand-held devices have gained popularity. Many of the company's competitors are not unionised and, therefore, better able to rein in labour costs.

The unions say the company is more than profitable enough - with nearly $18 billion in net income last year - to support a large work force with good benefits and wages.

They say that Verizon's fibre-optic Fios network, which provides telephone, video and internet service, remains lucrative. But they argue that the company's interest in it has flagged because the labour costs are much higher than for its wireless business, which is overwhelmingly non-union.

Perhaps, the most consequential issue at stake in the standoff was Verizon's ability to outsource work. The previous contracts included a provision requiring that a certain percentage of customer calls originating in a state be answered by workers in that state - ranging from just over 50 percent for some types of calls in some states to more than 80 per cent in others. Verizon sought to significantly lower those numbers.

Under the tentative new contracts, a similar percentage of calls must be answered by a unionised worker somewhere in Verizon's wireline footprint, which runs from Virginia to Massachusetts, rather than the particular state from which the call originates.

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