Verizon Compromises after Workers Strike Verizon Communications faced an increas
ID: 359029 • Letter: V
Question
Verizon Compromises after Workers Strike
Verizon Communications faced an increasingly uncom- mon situation in 2016 when about 39,000 of its work- ers went on strike. Those workers, represented by the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW), were employees of the wireline division in several states on the East Coast. These workers install and repair cables, as well as field questions and problems from wired-line customers in call centers. The strike was by far the larg- est in the United States in years. It followed 10 months of unsuccessful negotiations, during which time Verizon trained thousands of its nonunion employees to cover work performed by strikers and the union refused the idea of bringing in a federal mediator.
Company objectives focused on managing costs—for example, by reducing retirement benefits and having employees pay more of the cost of their health care. The union sought greater pension benefits and limits on jobs lost to outsourcing. After a strike of six and a half weeks, Verizon and the unions reached a compromise and workers overwhelmingly approved the deal. Included were raises amounting to more than a 10% increase spread over four years (versus 6.5% initially offered by Verizon) but no pen- sion cuts. Verizon gained flexibility in where it routes cus- tomers’ phone calls, cuts to the costs of its health benefits, and the right to reduce its workforce by offering employees buyout incentives once a year without first seeking union consent.
One long-term outcome may be a larger role for the CWA at Verizon. The contract includes about 70 retail workers in seven Verizon Wireless stores in New York and Massachusetts who had voted for union representation but previously failed to negotiate a contract. So far, unions have had difficulty organizing wireless workers, especially in stores because they are high-turnover jobs spread among many locations, often in malls, on private property, where union demonstrators may not be welcome or as visible. The union hopes that as other workers in the wireless divi- sion see the gains made by the store workers (for example, less of their pay being linked to sales targets), they will seek union representation, too. Initially, according to the CWA, Verizon was unwilling to include these workers in the contract negotiations.
Statements from Verizon suggest it sees the mostly union-free status of the wireless business as an advan- tage. Union gains there could make competitiveness more difficult in its prime business. In contrast, the wireline unit has played a declining role in the company, as more customers shift their services to the more profitable wire- less division.
Questions
1. What options does a company in Verizon’s situation have for avoiding a strike?
2. Suggest one or two labor relations goals for Verizon, and explain how it might achieve them.
Explanation / Answer
1) If a similar company is in Verizon's situation, it can avoid the strike by doing the following -
1) Give better benefits to its workers. When a company has been earning excessive profits year after year, then it should be able to give better deals to its workers to encourage them to work even more and much better then before.
It is reported that the Verizon corporation earned $9.6 billion in profits in 2014, $39 billion over the last three years – and $1.8 billion a month in profits over the first three months of 2016. From 2010 to 2014, Verizon executives made more than $249 million. Apparently, Verizon corporate bosses are unsatisfied with their massive profit margins and want to make working people do more with less, which needs to be avoided.
2) Give better deals to the union employees to become a non-union employee. Organizations with huge unions should slowly turn their union members to non-unions. And those who are revolting, good retirement benefits has to be given to completely mitigate the unions.
Unions are the biggest problem creaters in most of the organizations. So, removing the unions from the organization will slowly mitigate any problems associated with it.
3) Not slashing out the jobs. Verizon isn’t just looking to cut costs by slashing benefits and eliminating jobs; one of America’s most successful businesses is also taking money from taxpayers. From 2008 to 2013, Verizon received a tax refund of $732 million from the IRS, which resulted in a corporate income tax rate of minus two percent. That’s right, a negative income tax rate! Verizon is also culpable of stashing money abroad to avoid paying income taxes. In 2012, Verizon stored $1.8 billion in offshore tax havens.
Latly, all this has to be avoided in order to avoid the strike -
2) The relations goals for Verizon are -
Verizon can achieve them by ensuring that it gives equal opportunities, and benefits for all the stakeholders of the company and ensuring that they get motivated at work, and perform with their full efficiency and performance.
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