Grocery chains, union negotiating for new contract
Two of Colorado's largest grocery chains are seeking pension benefit cuts for unionized workers in contract talks now underway, union leaders say.
Negotiators for King Soopers Inc. and Safeway Inc. sought the cuts because pension funds for 15,000 members of United Food and Commercial Workers union Local 7 in Denver suffered investment losses last year between 30 percent and 40 percent and don't have enough assets to pay future benefits. Negotiations began last week and continue today and Friday at Doubletree World Arena Hotel.
The five-year contract between Local 7 and King Soopers, Safeway and Albertsons LLC expires May 9.
"Everyone with investments, including pension funds, have taken a hit because of the current economy and market conditions. As a result, the pension fund for these workers is worth significantly less," said Diane Mulligan, a King Soopers spokeswoman. "We have a proposal on the table for the company to increase its contribution to the fund, but not enough to make up the 30 percent to 40 percent in losses."
Local 7 negotiators rejected the King Soopers and Safeway offer, which the union said included raising the minimum retirement age from 50 to 62 to receive pension benefits, eliminating pension benefits for disabled workers and ending a $200-a-month supplemental payment paid to retirees between the ages of 60 and 62. The union also asked the chains to take advantage of provisions in a federal law that would delay benefit cuts required beginning May 1 if the plan remains underfunded.
"Many workers have dedicated their lives to these companies and contributed to their success. Just as the companies have earned profits, these workers have earned their pension, and the companies should not refuse them their retirement security," Local 7 President Ernest Duran Jr. said in a statement last week after the first round of talks. He was not available Tuesday for further comment.
Workers with vested retirement benefits they have already earned will not lose those benefits; King Soopers is "trying to figure out how to move forward from here" with the underfunded pension plan, Mulligan said.
The pension plan has been a contentious issue between the union and stores since the union rejected a plan a year ago that would have cut pension contributions for workers hired before that last contract was approved, but raised them for workers hired since then. The union also rejected a March 9 contract proposal that didn't include wage, health care or pension provisions but would have changed seniority and other work rules.
King Soopers, Safeway and Albertsons are negotiating separately with the union but are coordinating with each other so the contracts end up with similar provisions, Mulligan said. In the Colorado Springs area, King Soopers operates 10 stores with 1,000 workers covered under the contract , while Safeway operates 13 stores with 780 workers under the contract. Albertsons operates four local stores; the number of local workers covered under the contract was not available. A spokeswoman for Albertsons did not return a telephone call and an e-mail message seeking comment on the talks.
The current contract was drawn up by a federal mediator for King Soopers and Local 7 three months after the previous agreement expired; workers at Safeway and Albertsons agreed to a similar contract after union members ratified the King Soopers agreement.
Under the King Soopers contract, workers got a 30-cent-an-hour bonus and a 15-cent-an-hour increase in pension contributions, but were required to pay up to $15 a week in health insurance premiums, and newly hired workers received lower pay and less benefits. The chains said at the time they needed to reduce wage and benefits costs to compete with Wal-Mart Stores Inc. and other nonunion rivals.
Competition is an even bigger issue in the latest talks - nonunion grocers such as Wal-Mart, Target, Kmart and Costco have nearly doubled their share of Colorado's grocery market to 41 percent in the past five years, Mulligan said.
"Colorado is one of the most competitive grocery market in the country," Mulligan said. "King Soopers is a healthy and sound company and that leads to stability. Coming to an agreement quickly is important to that stability."
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