WageRestraint

Unions are settling for less

Inflation has slowed dramatically in the past year, and in March the Consumer Price Index actually went down for the first time since 1965. Yet economists have warned that the fight against high prices will not be won until the so-called core or underlying, rate also starts coming down.

Core inflation, which is currently hovering at somewhere around 7% to 8% is generally defined as the rate at which increases in labor costs exceed gains in productivity. Last week the Bureau of Labor Statistics reported some heartening progress in the struggle to bring down core inflation. In a survey of major collective bargaining settlements covering 645 000 workers during the first three months of 1982, the bureau found that increases in first-year wages averaged only 2.2% as compared with 7.8% in first-year wage increases agreed to 32 months ago, when the major contracts surveyed in the study were last negotiated.

Many relatively small unions managed to wring average first-year wage increases of 7% or more from their employers. But the two biggest unions in the study were far more accommodating. Both the International Brotherhood of Teamsters and the Ford Motor Co. members of the United Auto Workers agreed to forgo any wage increases in order to help hold down costs and prevent further layoffs in their recession-squeezed industries. With 335 major wage contracts covering 1.4 million unionized workers coming up for negotiation in the current quarter, a continuation of the wage restraint would be the best evidence that the fight against inflation is really being won.

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