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The Wall Street Journal reports this morning that Southern California’s three major food retailers – Safeway, Albertsons and Kroger – and the United Food and Commercial Workers (UFCW) have agreed to a two-week contract extension as they continue to negotiate a new labor deal.

The last contract ended over the weekend, but it has been extended to March 19.

The Journal writes, “Unions are pushing to reverse a concession they agreed to after a debilitating strike in 2003: a two-tier system they argue has kept most new workers from getting health care benefits.” That 2003 strike/lockout cost the chains as much as $2 billion by some estimates, and roiled the marketplace, sending many consumers to smaller competitors not experiencing labor strife.

This time around, it appears that both sides want to avoid a repeat of the strike/lockout scenario, with the chains having a new incentive – British retailer Tesco plans to begin opening stores in Southern California later this year, and undoubtedly would benefit from labor problems affecting the big three. Two of the region’s smaller chains, Gelson’s and Stater Bros., already have signed new contracts with the UFCW.

Unlike the last time around, the three chains reportedly are negotiating individually with the UFCW; last time, they negotiated as a unit.

Meanwhile, Safeway CEO Steve Burd has been pushing for a new approach to health care that would provide greater coverage for employees while at the same demanding of them a higher level of personal responsibility, though it is unclear to what extent his recommendations have become a factor in the negotiations.
KC's View:
We hope that some sort of responsible and comprehensive health care arrangement is part of whatever new deal is reached by management and labor…because it would be a shame to simply put off the inevitable for another three or four years.