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CBA's are Getting Shorter

With a weak economy neither side wants a long term contract

Kris LaGrange's picture
Oct 19, 2020

For the first time in at least 20 years, collective bargaining agreements (CBA) are getting shorter. That is the finding from Bloomberg which looked at CBAs signed in the first six months of 2020.

Their study found that for the first time since at least 2000, contracts that are for a year or less will not be the rarest type of CBA. They also found that as many two-year contracts were being signed as three-year contracts. In total 15% of the new contracts are for one year or less and 27% are for two years.

Shorter contracts often happen when the economic outlook is bleak. Unions may forgo a raise or may even settle for givebacks on a shorter contract with the knowledge that they will be able to negotiate a better contract once the economy recovers. This was common during the Great Recession, with some workforces negotiating multiple short-term contracts.

There may be more short contracts this year, especially in the first half of the year, because many believe that once the pandemic is dealt with the economy will recover quickly. Unions don’t want to be locked into a long-term austerity contract with a good economy so a short-term contract gives them the ability to negotiate a better one when times turn around.

From an employer’s perspective, this can also give them flexibility. If the economy doesn’t recover, then they can negotiate more austerity measures quickly instead of having to wait for a four-year contract to end.

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