disputes and to assist parties to labor disputes in industries affecting commerce to settle such disputes through conciliation and mediation.

In addition, the FMCS mission statement calls for the development of sound and stable labor-management collective bargaining relationships, the advocation of collective bargaining, mediation and voluntary arbitration as the preferred process of settling issues between employers and representatives of employees, and the fostering of constructive joint relationships of labor and management leaders to increase their mutual understanding and ability to resolve common problems. The Service's mission is accomplished through the following programs:

DISPUTE MEDIATION

In 1992 there will be major contracts expiring in the communications (telephone and telegraph), electronic manufacturing, retail and wholesale food, utilities, construction, farm implements, wood products manufacturing, broadcasting, shipbuilding, hotel, entertainment and health care industries.

Issues in collective bargaining will include normal "lunch box" issues but will also include proposals from both sides of the table dealing with more difficult issues such as health care cost containment, pensions, management rights, mixed pay systems, pay for knowledge, merit pay and lump sums versus percentage add-ons to existing rates.

Health care cost containment is expected to be the single most difficult issue in negotiations. A recent survey has shown that the average company spent 21.6 percent more last year to provide doctor and hospital care to employees than the year before. Over the past two years, the cost to employers has risen 46.3 percent and it is estimated that the cost of health care consumes 25 percent of corporate profits annually.

Dealing with the health care and other contentious issues will place a severe strain on labor-management relationships and we expect to be actively involved in 7,000 dispute mediation cases in fiscal year 1992.

PREVENTIVE MEDIATION

The mediator's involvement in the often highly stressful atmosphere of collective bargaining provides the ideal opportunity to assess the existing relationship between the parties. Preventive Mediation is specifically aimed at improving deteriorated employer-union relationships during non-crisis periods in the interest of avoiding future disputes. Through Preventive Mediation labor and management are introduced to methods of avoiding workplace strife and provided with training in approaches that alter previously hostile environments. Federal mediators will be involved in 1,400 Preventive Mediation cases in fiscal year 1992 and they will utilize a variety of approaches in problem identification and conflict resolution. Activities will include sponsorship of conferences and seminars, consultation and liaison, creation and expansion of labor-management committees, development of training modules, and use of our programs called Relationships-by-Objectives, Orientation to Labor-Management Initiatives, Partners-in-Change, and other non-adversarial or socalled "Win-Win" type assistance or training.

ARBITRATION

Arbitration is used almost universally to resolve labor disputes arising out of the interpretation of collective bargaining contracts. In addition, arbitration is used as a substitute for strikes or as a method of resolving impasses in contract negotiations. The Service maintains a roster of qualified arbitrators and provides lists of arbitrators to labor-management parties. The parties then select an arbitrator to hear and decide their dispute. In fiscal year 1992 we expect to submit 33,000 panels of arbitrators to the labor-management parties.

LABOR-MANAGEMENT COOPERATION PROGRAM

The Labor Management Cooperation Act of 1978 authorizes FMCS to carry out a program of grants and contracts to support the establishment and operation of plant, area, and industry labor-management committees. In fiscal year 1991 the Service will award 11 to 13 new grants, and approximately five extension grants will be issued to continue the work of grantees originally funded in fiscal year 1989. The Administration believes that in order for labor-management cooperation committees to be successful, they should be funded by the parties involved. Therefore, no funding is requested for new or extension grants in fiscal year 1992.

RESOURCE REQUIREMENTS

Our appropriations request outlines in detail the challenges that the Federal Mediation and Conciliation Service is facing and the resources needed to accomplish our mission.

Our fiscal year 1992 Submission includes a full-time equivalent level of 315-the same as that funded in fiscal year 1991-and an appropriation of $28,145,000. I respectfully urge your favorable consideration of our request.

Mr. Chairman, I will be glad to respond to any questions you may have.

LABOR-MANAGEMENT COOPERATION PROGRAM

Senator HARKIN. There is one area that we have been contacted by other Senators, and I understand there are some pending questions here that I would like to get on the record on the labor management cooperation grants.

The fiscal 1992 budget again proposes that the labor-management cooperation grant program be terminated, in spite of the fact that the program, I guess by all measurements, has been a very successful one. As a matter of fact, last year the Service testified to the fact that this program is extremely worthwhile. In your original budget submission, did you request funds for the continuation of this program?

Mr. DELURY. Yes, Mr. Chairman, we did. We requested them of the Office of Management and Budget.

Senator HARKIN. Can you tell us how much?

Mr. DELURY. We requested $3 million.

Senator HARKIN. The cooperation grants that we are talking about here are the ones that help establish these labor management councils?

Mr. DELURY. Yes, sir; that is correct.

Senator HARKIN. I can only tell you from my experience in Iowa, and actually along the border of Iowa and Illinois, too, that in every case where these have been started up they have just been tremendously successful reducing work stoppages, strikes-they reach agreements on package agreements sort of types of things. We have got two or three really successful ones in Iowa, and it seems to be equally supported by labor as well as management. Do you have any idea how many of these labor management councils started up last year? Are they growing? I mean, this is what the grants are for. Are we seeing an increasing usage of these, decreasing? What is happening to the labor management councils?

Mr. DELURY. Are you referring to funded committees, or the ones that just start up without funding?

Senator HARKIN. The new ones.

Mr. DELURY. Last year we funded 16 new grants, and awarded 12 continuation grants. I visited the Quad Cities Area Labor-Management Committee. They had about 200 people there from labor and management-a very successful program.

The instances of strikes are down. The cooperation between labor and management is up. We think they are very good programs. We encourage the parties to form industry committees together, or area labor-management committees, or plant committees at every opportunity with our field mediators, who serve as spokespeople for these types of preventive mediation programs.

Senator HARKIN. That is really the only area I wanted to cover. I wanted to get on the record your request on the grants and to let you know there is a great interest here in this subcommittee in not only continuing those but strengthening those, because we see them as a way of really increasing productivity and getting a job done in a better manner across the country. So we are going to take a very hard look at the funding for that.

I do not have anything else. Do you have anything else that you want to get across to us?

Mr. DELURY. We appreciate the support of the committee, Mr. Chairman, and we would like to reserve the right to come back to you from time to time and tell you about our activities and how well we are doing. We feel like you do, sir, that we contribute to the industrial peace and progress of the labor-management community in the United States of America.

QUESTIONS SUBMITTED BY THE SUBCOMMITTEE

Senator HARKIN. I have no doubt about it. Thank you very much. There will be some additional questions which will be submitted for your response in the record.

[The following questions were not asked at the hearing, but were submitted to the Service for response subsequent to the hearing:]

Question. What are your largest problems in the area of preventive mediation.

Answer. Preventive mediation is extremely time consuming and requires a large commitment of human resources. Our most successful preventive mediation activities spring from our dispute activity when the mediator discovers problems in the basic relationship between the labor-management parties which impede the collective bargaining process. Often during negotiations the parties realize that their relationship hinders them from making more of the process and agree to subsequent FMCS efforts to improve their ongoing relationship. Once the activity has begun with efforts to bridge the gaps in trust and communication between the parties, the most difficult problem then becomes maintaining the continuity of the effort from the inside, while slowly withdrawing FMCS service and allowing the parties to work on their own.

COST-OF-LIVING

Question. The Service has requested an increase of about 4.1% or $1.1 million in FY 1992; however, if you consider that you are eliminating the Labor-Management Cooperation Grants Program and are still carrying forward that funding in your FY 1992 base, the increase becomes about $2.4 million or a little over 8.2%. the fact that under the budget agreement, we are looking at cost-of-living increases, why do you need a 8.2% increase?

Given

Answer. The Summary of Changes section of the FMCS FY 1992 Appropriations Request (pages 3 and 4 of the Congressional Submission) shows the Service's needs for increased funding.

The largest increase in funding, $1,076,000, is needed to fully fund 315 full-time equivalents (FTE's). The second largest increase, $558,000, is needed to fund the mandated relocation of the Service's national office. The third largest increase, $238,000, is needed to cover the increased cost of field office space. There are other important increases listed in the Summary of Changes and we consider each to be vital.

HEALTH CARE ISSUES

Question. The issue of health care is becoming an even greater issue in labor disputes than pay. How do you see the issue of health care impacting on contract negotiations?

Answer. FMCS mediators report that bargaining over health care is a primary issue in the large majority of cases they mediate. It is one of major importance, in almost every case where a work stoppage has occurred in the last few years.

Percentage increases in the cost of providing health care to employees have far exceded the increases needed to settle wage demands.

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The parties are beginning to state that the issue of providing no or low cost health care as an employee benefit can no longer be resolved at the bargaining table, and they cite the absence of the third-party payer in the process as the biggest single reason for this inability to bargain.

Attempts at cost reduction through benefit reduction or cost shifting from the employer to employee (especially where the changes are substantial shifts in policy) have provoked major labor and management confrontations in a wide variety of industries in both the private and public sector.

Parties have explored many avenues to escape these problems but there has been no sure method of dealing with the ever increasing cost of health care delivery. The strain on the collective bargaining process is as great as any we have seen in recent years.

BARGAINING

Question. What are some of the problems you are facing in your current bargaining rounds? For example, could you tell us where do you currently stand with the Daily News strike or any other strikes that are afecting your workload?

Answer. The strike at the New York Daily News has ended, after its prospective new owner, Robert Maxwell, reached agreement with the News unions in mid-March.

FMCS was involved both before and during the 20-week strike at the News with each of the 9 unions represented by the New York Allied Printing Trades Council and the previous News management representatives.

Currently, our most visible strikes are at Ravenswood Aluminum in Ravenswood, West Virginia, where mediators continue to work with the parties for settlement, and at Food Barn Stores in the Kansas City, Missouri area. This strike began in the middle of February and fourteen-hundred members of the United Food and Commercial Workers Union are on strike.

The Service continues to work at getting an agreement to end the strike between Greyhound Bus and the Amalgamated Transit Union. This strike began March 2, 1990, at which time the company hired permanent replacements. The National Labor Relations Board subsequently found reasons to issue complaints of unfair labor practices against the company and hearings on those charges are now in progress.

LABOR-MANAGEMENT COOPERATION GRANTS

Question. The FY 1992 budget again proposes that the LaborManagement Cooperation Grant program be terminated in spite of the fact that this program has been a very successful one. As a matter of fact, last year, the Service testified to the fact that this program is extremely worthwhile. In your original budget submission, did you request funds for the continuation of this program?