TWO LOCALS OK SAFEWAY, LUCKY PACT -- EARLY

GREG GATTUSO

ROSEVILLE, Calif. -- Two union locals representing some 8,700 supermarket employees in northern California Safeway and Lucky stores approved a new, four-year contract last week -- seven months before it was due to expire.

Leaders of United Food and Commercial Workers Union Local 588, based here, and Local 373, Vallejo, Calif., called the pact "an historic agreement by far the finest, most progressive achieved in the nation."

While unions expressed satisfaction with the deal, financial analysts told SN an early contract can be equally beneficial to the chains.

"Usually, early settlements are better for the companies, because they can plan properly, knowing they will not have a labor interruption," said Gary Giblen, managing director at Smith Barney, New York. "It seems to me Safeway is pretty hard-nosed about these things. If it wasn't an eminently acceptable contract, they wouldn't settle -- they would continue to talk.

"It's always good to settle early," Giblen noted. "Harmonious discussions avoid the risk of a work stoppage."

The agreement is an important one, observers said, because it involves a substantial portion of the 32,000 workers who went on strike two years ago against more than 400 Safeway, Lucky, Save Mart and independent supermarkets in northern California.

With the two locals trumpeting major gains, neighboring locals are expected to follow suit and approve the same deal. So far, officials at seven other locals in the San Francisco Bay area have recommended the contract to their members, with voting set to take place this month. In all, about 55,000 supermarket employees could end up accepting the same or very similar contracts, union officials said.

Albertson's, Boise, Idaho, which has about 46 stores in northern California, has opened "preliminary discussions" with its locals in that market, even though contracts there will not expire for several months, said Mike Read, a spokesman for the chain. However, the chain has not begun negotiating and declined to discuss what issues might come up in contract talks.

"It's a real positive for the companies to settle early, even if it's with a portion of the northern California workers," said Debra Levin, principal with Morgan Stanley Dean Witter, New York. "If it has a domino effect, and the other locals sign the contract, it will substantially eliminate the threat of a strike."

The contract, which takes effect Sept. 7 and expires Sept. 1, 2001, calls for the largest pay increases of any UFCW local in the United States or Canada, and maintains health and welfare benefits, with no takeaways in wages or benefits. It also calls for the formation of a committee of labor and management officials that will meet regularly and discuss issues of mutual concern.

The local said the contract was negotiated behind the scenes for several months before it was presented to membership, and was eventually approved by 96.8% of the rank and file. "It is absolutely a good contract," said Jack Loveall, president of Local 588 here. "Any time I can get an early settlement that has better wages and benefits than the last contract, I'm going to do it."

Loveall, who has negotiated the local's contract with the chains for 23 years, said contract talks went "quicker than they usually would" because they involved top supermarket officials.

"The negotiations went smooth because we were dealing with the people who make the decisions," Loveall said. "They didn't have to go running to make phone calls every five minutes."

In a letter to union members, Loveall said, "Your employers . . . did the right thing without the old-fashioned brinkmanship and games-playing. For that I congratulate them. In addition to achieving a contract that is clearly the finest in the nation, it may well be that we have entered a new era of cooperation with the employers in our mutual quest for success."

Loveall told SN, "Both the union and the employer saw the necessity of reaching an agreement and not running into the March 1 deadline and having emotions run high and risking a labor-management confrontation."

Safeway and Lucky Stores were not available for comment.

The Safeway-Lucky contract calls for the following provisions:

Five wage increases for all journeymen classifications, implemented every nine months between 1998 and 2001.

Lump-sum signing bonuses of 50 cents per hour for time worked between Sept. 1, 1996 and Aug. 31, 1997, to a maximum of $1,000 per employee. Courtesy clerks will receive lump-sum bonuses of $100 to $350, depending on length of employment.

Current level of health benefits guaranteed.

A "hands-off approach" by management when the union attempts to organize a new store. Giblen called the contract terms "fair" for both parties.

"The union has accomplished something," he said. "But only within the confines of a reasonable settlement for Safeway. Still, it avoids a repeat of [the strike of] April 1995, and that's something in itself."