The U.S. Postal Service and a major union reached an agreement through arbitration that raises pay but also requires employees to pay more for their health benefits.
The National Associational of Letter Carriers and USPS were forced to go to arbitration after the two sides reached an impasse, according to the Washington Post. The previous contract expired in November 2011.
The new contract will increase pay by 3.5 percent over the next three years and institute seven cost of living adjustments. USPS’ Federal Employees Health Benefits Program contribution will drop from the current level of 80 percent to 78 percent in 2014. For new employees, the rate will be 77 percent and drop to 76 percent in 2016.
The contract establishes a labor-management group to study the possibility of removing postal employees from FEHB altogether. The Government Accountability Office is also assessing the viability of the Postal Service creating its own benefits system.
Other provisions of the new contract include lowering entry-level salaries and strengthening restrictions on contracting out certain jobs. It also creates a new a new type of non-career employee, who will be able to become a career employee more easily.
NALC represents about 280,000 members, about two-thirds of whom are active employees.
As the Postal Service resolved one problem, it turned its attention to its larger challenges. The agency continued its call for congressional action to fix its dire financial situation, saying in the meantime it is undertaking “a wide range of accelerated cost cutting and revenue generating measures” to get itself onto more stable fiscal footing.
The measures include restructuring initiatives and a revision to its five-year comprehensive plan, the USPS Board of Governors announced.
Homeland Security and Government Affairs Committee Chairman Sen. Tom Carper, D-Del., agreed the agency’s actions would not be enough.
“Unfortunately, the reality is that these piecemeal efforts undertaken by the Postal Service are likely not enough on their own to fundamentally fix the Postal Service's serious financial problems,” Carper said in a statement. “Only comprehensive reform of the Postal Service that takes into account its long-term needs can address the severe financial problems that continue to plague this American institution.”
Correction: This story has been corrected to reflect that the contract was reached through arbitration, rather than a mutual agreement. Also, the previous contract expired in November 2011.