Talks Stall on Safeway Buyouts
Plans by Vons and Pavilions to offer buyouts to some 7,000 veteran supermarket workers in Southern California have stalled because union officials say the program will deplete health and pension funds.
Safeway Inc., based in Pleasanton, Calif., announced in December that it wanted to offer buyouts to workers at its 293 local Vons and Pavilions stores, allowing the company to hire cheaper workers under its two-tier union pay scale.
Officials involved in the negotiations say about one-third of Safeway’s 22,000 employees would be eligible, mainly food and general merchandise clerks in non-supervisory positions. Safeway has earmarked $50 million for the program, which analysts say, could save an average of $6 per employee per hour, plus millions in healthcare costs.
The United Food and Commercial Workers union, however, fears an exodus of workers could strain local health and pension funds and spark similar buyouts at Kroger Co.’s Ralphs stores and Albertsons Inc. The union wants Safeway to set up an escrow account and provide a set amount of compensation for each employee leaving the union.
“We have to figure out how we can implement this without battering a trust fund that just went through trauma,” said Rick Icaza, president of UFCW Local 770 in Los Angeles.
Ralphs said it had no plans to offer employees a voluntary severance; Albertsons executives declined to comment.
The supermarket chains were granted the right to offer buyouts under the UFCW contract ratified in February 2004.
The sticking point in the Safeway negotiations is whether the company must first come to an agreement over terms of the severance with the UFCW before offering it. “Safeway thinks they can implement it if we reach an impasse. That is not the position of the unions,” said Greg Conger, president of UFCW Local 324 in Orange County.
Safeway presented a buyout proposal to the union in February, which the union then countered. Safeway executives declined to comment, other than to say that the two sides plan to meet again in May.
In a letter to employees two months ago, Vons Human Resources Director Deborah Conrad encouraged workers to consider the buyout, which would average $17,000 for a general merchandise clerk and $35,000 for a food clerk.
The union wants the offer to be extended to others, including department heads.
A cashier under the new contract starts at $8.90 an hour and tops out after about six years at $15.50. Under the old contract, cashiers started at $9.78 and topped out after two years at $17.90.
“There’s a considerable cost savings” for Safeway in a buyout package, said Mark Husson, analyst with HSBC Securities in New York.
Safeway’s shares closed Tuesday at $21.27, up 11 cents, on the New York Stock Exchange.
