Los Angeles, July 23 - Workers at supermarket chains Albertsons, Ralphs, Vons and Pavilions in Southern California have ratified a four-year contract that includes wage increases and a shorter waiting period for health care eligibility, both parties said Monday.
Ratification of the contract, which eliminates a two-tiered wage structure criticized by the union, ends the threat of a labor action that had loomed since the spring.
The contract was ratified by more than 87 percent of the 65,000 United Food and Commercial Workers from Bakersfield, California, to the Mexican border who are represented through seven local unions, said the UFCW.
Grocers confirmed ratification and said the contract provides comprehensive wages and benefits while still allowing the companies to remain competitive in Southern California.
The unions had negotiated since March through a federal mediator with Ralphs, Albertsons, and Vons and Pavilions, which are owned by Kroger Co., Supervalu Inc., and Safeway Inc., respectively.
During negotiations, both sides said they wanted to avoid a repeat of a debilitating labor action between the same parties in 2003 and 2004 that included a five-month lockout and strike. It was the longest work stoppage in the history of the U.S. grocery industry and accounted for over $1 billion in lost sales. It also led to suicides, lost homes and divorces among union members, according to the union.
Grocery workers had given their unions strike authorization earlier this year.
The contract, retroactive to March 6, 2007, eliminates a two-tier wage structure that the unions claimed punished newer workers. All workers will be eligible to reach the top pay scale in their job classifications.
Annual wage increases are retroactive to March 5. Food clerks -- the bulk of workers -- will get a 50 cent per hour increase in the first year of the contract, for example, with a total maximum increase of $1.65 per hour over the life of the contract.
The waiting period for health care eligibility has been shortened to six months for new hires and dependent children and 24 months for spouses. Previously, second-tier workers had to wait between one year and 18 months before qualifying, while their children and spouses were not eligible until 30 months after date of hire.
The union said it will use $240 million from its health care trust fund to supplement employers' contributions. That's about $3,000 per employee over the life of the contract, and will preserve a six-month reserve at the end of the contract's term.
The grocery chains have said it was hard for them to improve health benefits due to competition from lower cost nonunion rivals Wal-Mart Stores Inc. and Trader Joe's who have gained market share at their expense. Tesco Plc's upcoming launch in the United States, including in Southern California is expected to intensify competition.
"We were always prepared to give our associates enhancements to the contract," said Stephanie Martin, a spokeswoman for Albertsons. "But we were always focused on focusing our labor costs and we're able to do so with this new contract."