FEDERAL MEDIATION AND CONCILIATION SERVICE STATEMENT OF BERNARD E. DeLURY, DIRECTOR ACCOMPANIED BY: BRIAN L. FLORES, DEPUTY DIRECTOR MARY P. DURKIN, BUDGET OFFICER BUDGET REQUEST Senator Harkin. Now we will hear from the Federal Mediation and Conciliation Service. The mission of the Service is to prevent and to minimize labor-management disputes having a significant impact on interstate commerce or national defense for all industries, with the exception of railroad and airline industries. The fiscal year 1992 budget request for the Service is $28.1 million, an increase of $1.1 million over 1991. No funding is sought for labor-management cooperation grants. Welcome, Mr. Bernard DeLury, the Director of the Federal Mediation and Conciliation Service. Your statement will be made a part of the record in its entirety, and if you can introduce your companions and summarize your statement, I would sure appreciate it. INTRODUCTION OF ASSOCIATES Mr. DELURY. On my left is Brian Flores, who is Deputy Director of the Service-Brian is a 14-year career mediator with the FMCS-and on my right is Mary Durkin our budget officer, who has 21 years of service with the Federal Government and 18 years with the FMCS. PREPARED STATEMENT Mr. Chairman, if you would like, in the interest of time, we could dispense with reading the opening statement. We are requesting is $1.1 million over last year's budget or an increase of 4 percent, for a total of $28,145,000, which we expect will cover a full-time equivalency of 315, 204 of which will be stationed in the field, and we hope to add to that number by approximately 20 mediators in 1992. [The statement follows:] STATEMENT OF BERNARD E. DELURY Mr. Chairman and members of the subcommittee, it is my pleasure to present to you the fiscal year 1992 appropriation request of the Federal Mediation and Conciliation Service. I would like to describe briefly the Service's mission, detail our work by program area, and outline our request. FEDERAL MEDIATION AND CONCILIATION SERVICE'S MISSION The Service was established by Congress in 1947 as an independent agency to prevent or minimize interruptions of the free flow of commerce growing out of labor 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:] QUESTIONS SUBMITTED BY THE SUBCOMMITTEE PREVENTIVE MEDIATION from line to line 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 4.18 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. |