Merck settles with three unions - Merck and Company Inc - Developments in Industrial Relations

Monthly Labor Review, August, 1991 by Michael H. Cimini

Merck & Co., Inc. and three unions reached agreement on 3-year master and local contracts covering some 2,000 workers at six pharmaceutical manufacturing plants in Georgia, New Jersey, Pennsylvania, and Virginia. The three unions that were signatories to the contracts were Local 1389 of the Clothing and Textile Workers; Locals 8-86, 8-580, and 8-575 of the Oil, Chemical and Atomic Workers; and Local 609 of the Intemational Chemical Workers Union. (The master contracts cover wages and benefits, while local contracts cover work rules.)

A company official said the agreements respond to the company's needs for competitive wage rates, medical plan cost containment, and improved efficiency through more flexible work rules," and also "respond to the unions' desire for improved benefit programs."

Terms of the master agreements provide for general wage increases of 11-15 percent over the term of the contracts, with the largest increases for employees in more skilled job classifications. All employees will receive wage increases of 5 percent in the first year of the contract. Employees in skilled trades also will receive 5 percent increases in the second and third years of the contract, while employees in semiskilled jobs and unskilled jobs will receive increases of 4 percent and 3 percent. (At the expiration of the prior contract, the average hourly rate for employees covered under these contracts reportedly was $12.60.)

Several changes were made in the health care area, including the establishment of a new comprehensive medical plan. The plan calls for employees to pay 20 percent of all hospital and medical costs (previously, the company paid 100 percent of surgical expenses and 80 percent of other health care costs). The deductible remains $150 for single coverage and $300 for family coverage. The maximum "out-of-pocket" expenses decreased from $1,000 to $750 (after the $150 deductible) for single coverage and increased from $1,000 to $1,500 (after the $300 deductible) for family coverage. In addition, the medical plan provides for prescription drugs, with a $3 deductible per prescription (previously, no cost).

Other terms include an increase in the monthly pension rate, from $31 per year of credited service to $34 in the first year, advancing to $35 in the second year; an increase in life insurance benefits, from $10,000 to $15,000; and, for employees with at least 30 years of service, a new early retirement program, with benefits based on the highest earnings in any 5 consecutive year period.