Legal Definitions - concession bargaining

Concession bargaining is a specific type of negotiation that occurs during collective bargaining between an employer and a labor union. In this process, employees, often represented by their union, agree to give up or reduce certain benefits, wages, or favorable working conditions they previously gained. This "giving back" is typically done in exchange for some form of job security or to help the employer avoid financial distress, such as preventing layoffs, plant closures, or bankruptcy.

Here are some examples to illustrate concession bargaining:

• Imagine a long-established manufacturing plant that is struggling to compete with overseas production and is facing potential closure. The company informs the union that it needs to significantly reduce operating costs to stay afloat. During negotiations, the union representing the factory workers agrees to a temporary freeze on wage increases for the next two years and a reduction in the company's contribution to their retirement plans. In return, the company commits to keeping the plant open for at least five more years and guarantees no layoffs during that period. This scenario demonstrates concession bargaining because the employees are giving back previously negotiated wage increases and benefits in exchange for job security and the continued operation of their workplace.

• Consider a regional airline facing severe financial difficulties due to rising fuel costs and a sharp decline in passenger travel. The airline's management approaches the pilots' union, stating that without significant cost reductions, the company might have to file for bankruptcy, which would result in widespread job losses. After intense negotiations, the pilots' union agrees to accept fewer paid vacation days per year and to contribute a higher percentage of their salaries towards health insurance premiums. In exchange, the airline promises to maintain current staffing levels and avoid any involuntary furloughs for the next three years. This is an example of concession bargaining, as the pilots are sacrificing existing benefits to help ensure the company's survival and protect their jobs.

• A large grocery store chain is experiencing declining profits as more customers shift to online shopping and discount retailers. To remain competitive and avoid closing several underperforming stores, the company proposes changes to its unionized workforce. The union representing the store employees agrees to more flexible scheduling, including working more weekend shifts without premium pay, and a slight reduction in the annual cost-of-living adjustment for wages. In return, the company pledges to keep all current store locations open for at least four more years and to invest in retraining programs for employees to handle new online order fulfillment tasks. Here, concession bargaining is evident as employees are giving up favorable working conditions and a portion of their expected wage increases in exchange for the security of their store locations and continued employment.