Firms Plan Tougher Wage Bargaining, Survey Shows

Despite rising profits and reduced joblessness, employers intend to take a more aggressive, tighter-fisted stance with unions next year, according to a survey of companies with labor contracts expiring in 1988.

Of the 215 companies surveyed, 99% said they intend to keep pay raises next year to 4% or less and 29% said their goal is to limit them to a maximum of 2%.

The same survey a year ago by the Bureau of National Affairs, a private publisher of business research, found 93% of the companies whose contracts expired this year intent on keeping raises below 4%. And only 16% of the employers surveyed a year ago said they intended to restrain raises to 2% or less.

With the nation’s unemployment rate having fallen a full percentage point in the past year to a decade-low 5.9% in September, many economists have predicted larger wage increases as employers bid up the prices of labor from a dwindling pool of available workers.

Large increases in productivity and the related profitability of many companies the first six months of this year plus an inflation rate now running at 5.1%, compared to 1.1% in 1986, also are expected to exert upward wage pressures.

That upward pressure already has manifested itself to some degree. Labor contracts negotiated during the second quarter of 1987 produced average first-year wage increases of 2.6%, compared to increases averaging 1.2% in contracts negotiated in the first quarter and in all of 1986.

Plan to Keep Up Pressure

But nearly two-thirds of the 732,000 workers who were covered in the 1987 second-quarter agreements received boosts averaging a larger 4.1%, the biggest since the first quarter of 1985.

Nonetheless, an overwhelming majority of the 215 employers in the newly released BNA survey indicated that they are determined to prevent unions from reversing a downward pattern in negotiated wage increases that began in 1982.

“Until we get real wage levels down much closer to those of Brazil’s or (South) Korea’s, we cannot pass along productivity gains to wages and still be competitive,” Stanley Mihelick, executive vice president of Goodyear Co., is quoted as saying.

Competition from foreign producers as well as new non-unionized companies in recently deregulated areas of the economy will remain the chief bargaining card for employers going into next year’s negotiations.

Up for renewal in 1988 are major union contracts in the rubber, petroleum and electrical machinery industries.