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Latest News - December 2011

December 2, 2011
Employees at Pathmark, Superfresh Vote to Accept Wage Cuts
Source: Patch
By: Bruce Vail

Hoping to recover from bankruptcy, grocery chains force concessions on more than 1,200 supermarket workers in the Philadelphia area, and beyond.

Facing a series of grim alternatives, grocery workers at 16 Philadelphia-area Superfresh and Pathmark supermarkets voted Tuesday to approve labor contract concessions designed to help the food retailers return to profitability. 

The vote approved changes to a union contract that will restrict wages and cut benefits for some 1,200 cashiers, meat cutters, bakery staff and other supermarket workers, according to union president Wendell Young IV.

That includes workers at the Pathmark in the Huntingdon Valley Shopping Center.

“This wasn’t easy. No one was happy with the situation,” Young said. “But it is also bittersweet in the sense that there is optimism that making these cuts now will give the company a chance,” to recover from its financial problems.

The vote—held at the United Food & Commercial Workers Local 1776 union hall in Plymouth Meeting—came as a direct result of the bankruptcy of The Great Atlantic and Pacific Tea Co., or A&P, late last year.

About 80 percent of members voted in favor of the concessions.

A&P, the parent company of Pathmark, Superfresh and several other chains in the mid-Atlantic region, filed for Chapter 11 protection from creditors in a federal bankruptcy court in New York. It cited heavy debts and high labor costs as two reasons for the filing.

Since then, A&P executives have been engaged in talks with a coalition of 13 union locals representing more than 30,000 grocery workers throughout the mid-Atlantic region. At the outset of negotiations, A&P said that it needed labor concessions worth $125 million annually to avoid financial collapse and liquidation of the company.

The negotiations were difficult, Young said, and the union leaders were constantly aware that the Chapter 11 bankruptcy law was working against them. Section 1113 of the law permits bankruptcy judges to cancel existing labor contracts outright, and the threat of such cancellation was a constant cloud over the negotiations, he said.

Ultimately all 13 local unions agreed to concessions. In voting held over three days, the rank-and-file membership ratified the agreements by strong majorities in all cases, Young said.

A pooled vote count from all 13 union locals showed about 80 percent of members in favor of the concessions, he said.

A&P spokeswoman Marcy Connor said the company would not comment on the labor agreements.

In addition to the 16 Philadelphia-area stores affected by Tuesday’s Local 1776 vote, about a dozen other Pathmark and Superfresh stores in eastern Pennsylvania will see similar concessions under separate agreements with other UFCW locals.

“Clearly, the grocery workers were in a very difficult position,” commented Ken Jacobs, chairman and professor at the UC Berkeley Labor Center, and an expert on labor relations in the grocery industry. 

The union had the choice of accepting the negotiated concessions, or being forced to accept more draconian cutbacks through Section 1113 action, or of losing the jobs entirely, Jacobs said. “It puts them in a position where they really have very little choice,” he said.

The bottom line: Wage cuts and freezes, limited hours, higher health insurance costs

Local 1776’s Young said the new agreement covering his members featured a small wage cut and long wage freeze. 

“There is no across-the-board wage cut, but members have agreed to trim wage costs by accepting a lower wage for a limited number of hours each week,” he said. 

The agreement also calls for a wage freeze to last throughout the five-year term of the new agreement, he said.

Union members will also shoulder higher health care insurance costs, according to Young.

Despite Young’s optimism that the new labor agreement will help A&P return to profitability, not all observers are convinced the company will survive. 

Marc Levinson, author of a new book, The Great A&P and the Struggle for Small Business in America, commented that “labor costs have been an issue for A&P for a long time, but that is not the only issue.”

“I’m not sure A&P is long for this world no matter what the labor agreements are,” Levinson said. “The real value of the company is in its real estate properties—particularly in New York City and the close-in suburbs—and I would expect to see that real estate all sold off in the not-too-distant future.”



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