Verizon strike by nearly 40,000 CWA and IBEW members ends with new 4-year deal; workers expected back on the job this week
Story updated with details on agreement
Verizon Communications and unions representing nearly 40,000 striking employees have reportedly reached an agreement on a new four-year labor deal.
U.S. Secretary of Labor Thomas Perez released a statement stating the parties had reached an agreement in principle on a new contract to be submitted to members of the Communications Workers of America and the International Brotherhood of Electrical Workers. The strike began on April 13, with the Department of Labor getting involved in the process earlier this month.
“Throughout the past 13 days of negotiations at the Department of Labor, I have observed firsthand the parties’ good faith commitment to narrowing differences and forging an agreement that helps workers and the company,” Perez noted in a statement. “The parties have a shared interest in the success of Verizon and its dedicated workforce. Indeed, these two interests are inextricably intertwined.”
Perez added he expects striking workers to be back on the job as soon as this week, with Verizon adding workers will begin filing back into positions June 1.
Amongst details of the contract, workers are set to receive a 10.5% wage increase over the four-year term of the deal, with Verizon committed to hiring approximately 1,300 new workers. Verizon for its part said it gained the ability to offer special buyout incentives to employees and health care cost savings for current and retired workers under its pension plan.
“This will allow our business to be more flexible and competitive and will help achieve greater efficiencies as we operate in the ever changing and dynamic digital marketplace,” said Marc Reed, Verizon’s chief administrative officer.
CWA touted “big gains” in a statement on the new deal, noting it also achieved a first contract for wireless retail store workers.
“The addition of new, middle-class jobs at Verizon is a huge win not just for striking workers, but for our communities and our country as a whole,” said CWA President Chris Shelton. “The agreement in principle at Verizon is a victory for working families across the country and an affirmation of the power of working people. This proves that when we stand together we can raise up working families, improve our communities and protect the American middle class.”
IBEW said it would be sharing details of the agreement with its members for approval “in the immediate days ahead.”
Verizon has not yet commented on a potential deal, but in late April presented what it said was the “last, best, final” offer to union representatives, which was not warmly received. Verizon said the offer was put in front of CWA and IBEW leaders, and included a number of details, including a 7.5% increase in wages over the contract term, increased health care expense contributions and the continuation of current 401(k) contributions.
Verizon earlier this week acknowledged it was beginning to see some financial impact from the strike that could affect the telecom operator’s second quarter results.
Verizon CFO Fran Shammo said the company has seen new orders for its FiOS product drop due to the labor strike, while device upgrades at its wireless business were also “very slow right now.” The telecom operator, which had previously stated it did not expect any immediate operational impact from the labor strife, explained new installations had stalled, with labor capital being diverted to repair and maintenance services.
Acting on the news, Wells Fargo Securities slashed its second-quarter and full-year wireline revenue estimates by $343 million and $826 million, respectively; and lowered its Q2 wireline margins from 18.9% to 17.7%, and its full-year wireline margins from 20.7% to 19.9%. The firm said it expects Verizon to lose approximately 25,000 customers from both its FiOS and video service during Q2, from previous guidance of 75,000 and 30,000 net adds, respectively, while operating expenses could negate any drop in capital expense.
The labor drama is also said to have been distracting Verizon’s efforts on the wireless side, with Shammo noting Q2 upgrade activity was slow due to customers potentially waiting for new device launches later this year. Wells Fargo took this information to heart in lowering its Q2 postpaid upgrade rate from 6.5% to 5.5%, and its third-quarter upgrade rate from 6.5% to 6%, while lowering its Q2 postpaid net addition estimate from 860,000 connections to 659,000 connections.
“On the positive side, the lack of a new iconic device typically means that customer churn should remain low,” explained Jennifer Fritzsche, Wells Fargo Securities senior analyst, in a research note. “On the bad news side, lower upgrades mean weaker equipment revenue, with customers holding on to devices for longer. [Verizon] has also been less promotional in Q2 [2016] than in Q2 [2015] and saw a slight negative change to porting trends in April.”
Bored? Why not follow me on Twitter
