Merck, three unions settle, end 15-week strike

Monthly Labor Review, Nov, 1984

The longest strike in the history of Merck & Co. ended when the firm settled with a council of unions including the Oil, Chemical and Atomic Workers, the Chemical workers, and the Clothing and Textile Workers. The major issue in the 15-week walkout was a company demand for employee pay cuts to enhance Merck's ability to compete with other pharmaceutical companies. Merck claimed its wage rates were 18 to 46 percent above its competitors and that its employees earned an average annual salary of $34,500 in 1983. Union officials disputed this, claiming that the average was about $23,000.

Merck's demand for compensation cuts included a call for adoption of a two-tier wage system under which new employees would be permanently paid less than those already on the payroll. The final provision did not amount to a true two-tier system because the additional pay sacrifices applicable to new workers would be recoupled. The 4-year contract does not provide for specified wage increases or automatic cost-of-living adjustments in the first year. Current employees will receive lump-sum payments of $700 on April 30, 1985; $800 on April 30, 1986; and $500 on April 30, 1987. In addition, they will receive possible cost-of-living adjustments of up to 15 cents an hour in the fourth year. New employees will not receive the lump-sum payments or the current $3.15 to $3.18 cost-of-living allowance, but will receive a 30-cent-an-hour wage increase after each 12 months of service. They would attain pay rate parity with current employees in about 10 years, assuming the provision for 30-cent increases is retained in subsequent contracts.

The contract, which expires on April 30, 1988, increases lifetime major medical coverage to $750,000, from $250,000; medical deductibles to $150 for single coverage and $300 for family, from $50 and $150, respectively; covered hospital stays to 365 days, from 120 days; and requires a second medical opinion for surgery. Other benefit changes included a $1,000 increase in life insurance coverage, to $5,000, and unspecified improvements in pensions.

The accord covered 4,000 employees at operations in Rahway and North Branch, NJ; West Point, Hawthorne, and Danville, PA; South San Francisco, CA; Albany, GA; and Elkton, VA.