Protecting the Worker From Secret Deals

Thousands of General Electric’s American workers may be better off after their jobs are nationalized. Even if they will be working for the French, not the U.S., government.

But the dramatic change in employers was kept secret from the workers and their union representatives until a few hours before the deal was announced publicly July 23. Thus, the workers had no say in a decision that could have a major impact on their lives--for good or ill.

The decision was made by a small group of executives: GE Chairman John Welch, a few other GE officers and some officials of Thomson S.A., the French government-owned electronics giant that last month agreed to buy GE’s consumer electronics division.

It wasn’t a dirty trick that management played on GE workers. It was all part of the American Free Enterprise System.

The GE workers may be treated well by the French, and they don’t have to move abroad. Thomson says it will honor GE workers’ union contracts, at least until 1988, when current contracts at both GE and Westinghouse expire. And, in fact, the GE workers’ jobs may have a better chance of survival under the French government than under GE.

GE shareholders, too, may be better off with the estimated $800 million in cash and the medical equipment business they are getting from Thomson in return for such operations as the RCA and GE television manufacturing arms.

The United States, on the other hand, may not do quite so well, even if the French make good on their promise to continue making electronics products here. A lot of money could leave the United States in the form of profits to the French government from sales of GE and RCA televisions, which together hold a 23% share of the U.S. market.

Most important, however, are the two overriding questions for all American workers posed by the GE-Thomson deal: Should a few corporate executives continue to make crucial decisions for workers without their knowledge? Can the process at least be modified without wrecking the System itself.

It’s clear that decisions affecting the economic lives of tens of thousands of workers rarely should be made in secret by a handful of corporate executives who are often more concerned with the welfare of shareholders than workers. And the workers should have some protection from any adverse impact from those decisions.

For instance, the GE-Thomson transaction included no contractual requirement that the French government retain the 31,000 workers at affected GE facilities, much less that it abide by the terms of their union contracts.

In other words, there was no successor clause in the GE union contracts. Strong successor clauses should be a top priority on the bargaining table of every union, but seldom are.

Such clauses aren’t new. For years, unions such as the Hotel Employees and Restaurant Employees Union have had them with small firms in its high-turnover industry.

But most of the relatively few successor clauses that have been negotiated are weak. And while their number has increased in recent years, rarely do the clauses say flat out that union contracts are binding for any other business that takes over their company.

Congress could help somewhat if it passes the weak “plant closure” measure that, if it isn’t killed by President Reagan, will require employers to notify workers 60 days in advance of substantial layoffs or plant shutdowns.

Some companies now do that voluntarily, or under terms of their union contracts. For example, GE’s union contracts require that workers be notified 90 days in advance of plant closings or major layoffs.

But the proposed law and existing contract provisions only give workers a matter of weeks to plan for their futures before their jobs are eliminated. The plant closure bill should, nevertheless, become law as a token of good faith, an indication that Congress might wisely go much further eventually and also make successor clauses mandatory and require severance pay when jobs are lost.

Union and non-union workers alike need a law requiring a successor company to retain all qualified workers employed by the previous owner if the same production levels are maintained. And the new owners must be legally required to honor the workers’ union contract, if they have one.

The U.S. Supreme Court recently provided the outlines of other useful legislation through two rulings that afforded workers a bit of protection from arbitrary corporate decisions.

On June 2, the court upheld a Maine law that requires an employer to provide severance pay to workers when a plant is closed or moved. The Maine law makes good sense, and Congress should adopt a similar severance pay law for the entire country.

In the other case, the justices outlawed a tricky maneuver some companies use to avoid a federal law requiring a successor company to negotiate with the employees of the old company when more than 50% of the workers are retained by the new owners.

To evade that decision, some cunning companies would close down a plant they just bought and reopen it a short time later. Then they would claim that the plant should be considered a new facility, and thus should be exempt from the law, removing any obligation the companies would have to bargain with workers.

These court rulings, however, provide very limited protection for workers. Successor companies still don’t have to live up to the terms of contracts with the old company unless the union has a contract provision explicitly saying that. Under federal law, the new owners only have to try to negotiate a new contract if they retain most of the old workers.

GE’s deal with the French may be a good one for GE workers. But it ought to spur congressional consideration of ways to expand corporate decision-making processes and to protect workers when they are hurt by decisions they had no part in formulating.

Union Leaders Back Early Endorsements

There still are so many Democratic Party presidential candidates that the AFL-CIO almost certainly will not be able to decide which one to endorse at the labor federation’s convention in Miami opening Oct. 27, before the presidential primaries begin.

But the idea of endorsing before the primaries is far from dead. With rare exception, union leaders think they did the right thing in October, 1983, when they endorsed Walter Mondale for the 1984 election before the primaries got started. Union leaders want to continue the practice, which would require one candidate to get a two-thirds majority to win labor’s second-ever pre-primary endorsement.

Support for the plan was made plain in the just-issued formal announcement for the coming union convention. The AFL-CIO leaders said the delegates must “continue the development of unity and solidarity among our constituent unions and their members in ways that will give maximum strength to the workers’ voice.”

And the way for union workers to get their maximum political strength is not to wait until the Democratic Party nominates its candidate and then endorse that candidate, which had long been the practice. They want to be a united force early on so unions can be a major force in choosing the party’s candidate.

Before 1983, each union named its favorite and often battled other unions to get its choice nominated by the Democratic Party.

This year, however, AFL-CIO affiliates have agreed for the second time not to endorse a candidate before October. But since it now seems so clear that no presidential candidate yet has the support needed for an early endorsement, union leaders are already talking about their political plans for after the October union convention.

Many of these leaders are hoping that the unions can unite around a single candidate before the Democrats’ convention next summer even if they can’t agree on one of the presidential hopefuls in October.

That might happen. If not, the unions probably will go back to the 1980 tactic that came to be known as the “ride-any-horse-you-can-but-get-to-New-York” plan.

Union activists then vied for positions as delegates of any presidential candidate so they could get a seat at the Democratic convention in New York, where most ended up supporting Jimmy Carter. The strategy allowed them, at the last minute, to combine their voting strength behind the most acceptable candidate.

That type of fall-back strategy may be necessary again in 1988 if the preferred pre-primary endorsement system fails.