Verizon, unions agree to pay raises, new jobs to end strike

[May 31, 2016]  By Chuck Mikolajczak

(Reuters) - A tentative deal between Verizon Communications Inc  and leaders of striking unions includes 1,400 new jobs and pay raises topping 10 percent, the company and unions representing about 40,000 workers said on Monday, hoping to end a walkout that has lasted nearly seven weeks.

One analyst called the deal "very rich" for workers at Verizon, the No. 1 U.S. wireless provider, which reached the tentative pact with the Communications Workers of America (CWA) on Friday. Details for the new four-year contract were disclosed on Monday.

The CWA said Verizon agreed to provide a 10.9 percent raise over four years while Verizon put the increase at 10.5 percent. According to the CWA, both numbers are correct, with the union's calculation including compounded interest as subsequent raises are determined from a new base salary.

“They needed to end the strike and they bit the bullet," said Roger Entner of Recon Analytics. He said he thinks the deal "reinforced their commitment to basically exiting" wireline, which he called "the least profitable, most problematic part of the business”

The new contract "gives Verizon four years basically to get rid of the unit. Let it be somebody else’s problem,” Entner said.

But not all analysts saw the deal as the first steps in an eventual sale of the wireline business.

"That is an option available for Verizon," said Jim Patterson, CEO of Patterson Advisory Group. "However, their recent investment in XO (fiber-optic business) would seem to indicate that infrastructure is becoming a more vital part of the business.”

Nearly 40,000 network technicians and customer service representatives of the company's Fios internet, telephone and television services units walked off the job on April 13.

Striking workers will be back on the job on Wednesday, the CWA said.

Joshua B. Freeman, labor historian and CUNY professor at Queens College in New York said he would call the contract a win for the union, while noting the increasing rarity of a strike of that size and length.

"These guys not only struck and survived but actually came out of it with a pretty good contract," he said. "These days, that is a very unusual thing, to see that kind of walkout."

TENTATIVE NEW CONTRACT

The workers have been without a contract since the agreement expired in August; healthcare coverage ran out at the end of April. In 2011, Verizon workers went on strike for two weeks after negotiations deadlocked.

The latest work stoppage stretched across states including New York, Massachusetts and Virginia. Verizon brought in thousands of temporary workers.

New York-based Verizon will add 1,300 call center jobs on the East Coast, and 100 new network technician jobs, Verizon spokesman Richard Young said.

It will withdraw proposed cuts to pensions as well as reductions in accident and disability benefits. The company, however, won cost savings through changes in healthcare plans and limits on post-retirement health benefits.

If union members ratify the agreement, the new contract would run until August 2019.

Members of local unions will vote by mail, at mass membership meetings, and at walk-in balloting meetings and all results are due back to the CWA by June 17, according to Bob Master, assistant to the vice president at the CWA.

A "Now Hiring" sign is posted on a Verizon store in Manhattan in New York City, U.S., May 10, 2016. REUTERS/Brendan McDermid

Master said, "We’re pretty confident the members will be supportive of the agreement," citing the closeness between the leadership and its members.

A key objective in the negotiation, according to Master, was the first-time inclusion in the union of Verizon Wireless retail workers.

Verizon worker Fitzgerald Boyce, 45, said he was likely to vote in favor.

"I am extremely relieved that we have a good contract from what I am reading," said Boyce, a field technician who lives in Brooklyn, New York. "To be able to keep our benefits and actually increase the number of union jobs is a great thing."

Verizon and the two striking unions were in contract discussions with the help of the U.S. Department of Labor. In mid-May, U.S. Labor Secretary Thomas Perez brought the parties back to the negotiating table.

The strike, one of the largest in recent years in the United States, drew support from Democratic U.S. Presidential candidates Bernie Sanders and Hillary Clinton.

SHIFT TO MOBILE

Verizon has shifted its focus in recent years to mobile video and advertising, while scaling back its Fios television and internet services. To tap new revenue, it is boosting its advertising-supported internet business and acquired AOL for $4.4 billion.

Verizon, which claims a high-quality cell network, is locked in a battle for subscribers with AT&T Inc <T.N>, Sprint Corp <S.N> and T-Mobile US Inc <TMUS.N> in a saturated U.S. wireless market.

Verizon's legacy wireline business generated about 29 percent of company revenue in 2015, down sharply since 2000, and less than 7 percent of operating income.

Verizon Chief Executive Officer Lowell McAdam said last week the strike could hurt second-quarter results.

Verizon shares closed up 1 percent at $50.62 on Friday. U.S. markets were closed on Monday for the U.S. Memorial Day holiday.

(Reporting by Amrutha Gayathri in Bengaluru, Daniel Trotta and Chuck Mikolajczak in New York; Editing by Nick Zieminski and David Gregorio)

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