Verizon, unions in tentative labor contracts
NEW YORK (Reuters) - Verizon Communications (VZ.N) and two unions have reached tentative agreements for labor contracts covering about 43,000 technical and customer service workers in its wireline telephone business after more than a year of negotiations and a strike.
Verizon was looking to slash its wireline telephone costs to bring them into line with declining revenue at the business, which has faced a steady stream of customer disconnections in recent years as consumers favor cellphones over home phones.
But the unions had fought back, saying that it asked for too many concessions in areas such as job security, pensions and healthcare contributions for the workers, which represent about half of Verizon's wireline workforce.
Under the new agreement, Verizon failed in its effort to freeze pension plans and change some job security provisions, but it prevailed in making the workers contribute for healthcare benefits, according to a union communication with its members.
Verizon declined to discuss the details of the contract.
Guggenheim Securities analyst Shing Yin said it seemed "at first glance that Verizon had probably made more concessions than the union."
But Yin described the news as a "mild negative" and said he expects Verizon shares to hold steady because investors were not "expecting the contract to be very positive for Verizon" after the long drawn-out negotiations.
The new contracts with the Communications Workers of America and the International Brotherhood of Electrical Workers would run through August 1, 2015, if they are approved by the workers.
FROM SABOTAGE AND INJURY CLAIMS TO MEDIATION
Verizon and the unions decided to enter into mediation talks in late July because they had not reached an agreement after their negotiations neared the 1-year anniversary of the start of a 2-week strike that took place in August 2011.
During the work stoppage, which started on August 7, 2011, Verizon asked tens of thousands of its managers to work 12-hour days for 6 days a week to cover for the strikers.
The strike, which put a dent in Verizon's third-quarter earnings last year, had quickly turned bitter as Verizon complained of network sabotage while the unions had said that picketers were injured by Verizon vehicles.
The CWA, which represents 34,000 of the workers in question, said the new contract preserved previous job security language and the existing defined pension plan for all its current employees.
However, employees who join Verizon after ratification will instead be put on a 401(k) retirement program in which the company will match employee contributions of up to 6 percent of their salary.
Verizon said the contract would be good for the company and its employees, but a spokesman declined to comment on the financial impact of the new agreement.
"It provides competitive wages, valuable benefits and affordable quality health care while giving the company new flexibility to better serve customers and become more efficient." Verizon Chief Administrative Officer Marc Reed said.
Verizon shares closed at $45.27 on the New York Stock Exchange on Wednesday.
(Reporting by Sinead Carew; Editing by Gary Hill, Sofina Mirza-Reid and Richard Chang)
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