Lucent Technologies reached a tentative national agreement with the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) on a seven-year, seven-month contract that offers a 16.28% increase in wages compounded over the life of the agreement and a solution to the challenges surrounding the funding of healthcare benefits for formerly represented retirees.
Lucent said the deal "creates opportunities for the company to compete more effectively for installation work in the United States and provides job security provisions for its current installation team."
Some key points include:
- Lucent will continue to subsidize a significant portion of the cost of post-retirement healthcare benefits, but the agreement provides the company with a capped level of retiree healthcare costs. This capped level is expected to be approximately $450 million in fiscal 2005, and it is expected to decrease over time. Costs above this capped level will be passed along to retirees in the form of premiums and plan design changes. The funding will come from an existing healthcare trust fund, which is expected to be depleted by fiscal 2007, and thereafter from the potential transfer of surplus pension assets and/or operating cash.
- The company agreed to establish a new $400 million trust to be funded over eight years and managed jointly by the company and the two unions. It will be used to partially mitigate the cost impact of premiums or other plan design changes on those retirees most affected by this change.
- The agreement acknowledges that healthcare for formerly represented retirees will no longer be a required subject of future bargaining between the company and its unions.
- The contract calls for wage increases of 16.28% compounded over the life of the agreement. It also calls for a $1,000 ratification bonus payable in January 2005.
- The company and unions have created a market-based framework for new installation jobs.
