Contract negotiation at a critical point
The United Parcel Service (UPS) and the International Brotherhood of Teamsters have reportedly reached a tentative agreement on a new contract, potentially averting a labor strike that could have dealt a severe blow to US supply chains and the economy. This possible strike could have started by next week.
"We've changed the game, fighting day and night to make sure our members win a settlement that pays strong wages, rewards their labor, and doesn't require a single concession," Teamsters President Sean O'Brien said in a release. , They believe the contract set a new benchmark in the labor movement, raising the bar for all workers.
Wave of empowerment in the American labor movement
The agreement comes at a time when the American labor movement has become increasingly active and empowered. The pandemic has led to an increase in wages for lower- and middle-class American workers, but contract workers often missed out on this benefit. As a result, unionized actors, writers, nurses and teachers have recently gone on strike, and UPS workers and auto workers have threatened to walkout.
UPS CEO Carol Toomey acknowledged the achievement, saying the agreement is a win-win for Teamsters leadership, UPS employees and the company's customers. The agreement will continue to reward UPS's full and part-time employees with industry-leading pay and benefits, while retaining the flexibility the company needs to remain competitive.
Finalization of the deal: Ratification process
However, the agreement is yet to be finalised. To completely eliminate the strike threat, the tentative agreement needs to be ratified by the roughly 340,000 Teamsters at UPS. This ratification process will take a little over three weeks. It can still launch a strike if the settlement fails to get approval.
The main focus of the contract negotiations were demands for air conditioning for the delivery vans, significantly higher wages, especially for part-time workers, and closing the wage gap between the two different classes of UPS workers. Talks had reached an impasse on 5 July over economic issues, but resumed on Tuesday and soon reached a tentative agreement.
Major victory in tentative settlement
The details of the tentative agreement are not yet public. However, according to the union, current full- and part-time UPS Teamsters will receive pay increases to $2.75 per hour in 2023 and $7.50 per hour during the term of the contract, or more than $15,000 per year. Existing part-time workers will be raised to no less than $21 an hour immediately, and the starting wage will be increased to $23 an hour during the life of the contract.
Strike threat still looms
Even with substantial increases in wages and other victories at the bargaining table, the threat of a strike has not gone away entirely. There is still considerable discontent among many Teamsters, which could result in the cancellation of the deal.
At the same time, there will be relief in some members for not going on strike. The last strike at UPS was in 1997, which means that most of UPS's 340,000 Teamsters have never experienced a strike during their tenure at the company. Despite this, there have been instances where ratification votes have failed despite the support of the union leadership.
Potential economic impact and future steps
The strike threat is still looming, and UPS can still lose customers even with a short strike. Companies may sign long-term contracts with UPS rivals such as FedEx to keep their packages moving. UPS will detail its estimate of contract costs when it reports its second-quarter earnings on August 8. Shares of UPS were down 1.5% in afternoon trading.
If this tentative agreement is approved, it could set a new precedent in the labor industry, proving the power of collective bargaining in securing fair wages and benefits for workers. As the ratification process continues, all eyes will be on UPS and the Teamsters' actions, which will mark an important chapter in labor history.
