Wednesday, June 6, 2012

Labor Faces New Challenge. Losses in Wisconsin, California Come as Ranks of Government Unions Decline

Once again it is interesting for me to read articles like this as they closely mirror the news of the day in the 90’s back in Australia. The unions tried to hold out, however economic reality prevailed much the same as what is described in the following article. Aivars Lode

Barb Forgue, front, of Marshall, Wis., sings a union song in support of recalling Gov. Scott Walker on Tuesday. The governor defeated the bid.

Organized labor, reeling from blows to government workers in Wisconsin and California elections, is grappling with the prospect of diminished political clout and fewer members in public-sector unions that have formed the core of the movement's power in recent years.

Now, even in some Democratic pockets of the country, voters are signaling they are comfortable with shaving benefits and bargaining power from government-worker unions.

The shift has broad economic implications. For cash-strapped states, it opens an avenue for cuts to obligations that are a big source of spending. For government employees, it erodes some of the benefits they have come to expect in recent years.

    GOP Looks for Post-Wisconsin Boost
    White House: No Deeper Meaning in Wisconsin

New figures show that membership in the American Federation of State, County and Municipal Employees—one of the nation's largest and most politically powerful unions—is declining across the country.

Membership in Afscme fell 4.2% to 1.32 million, from 1.37 million, between March 2011 and February 2012, according to internal union documents viewed by The Wall Street Journal. The union had declines in all but seven states. In the same period, the number of state and local workers nationwide fell less than 1%, according to the Labor Department.

Afscme membership in Wisconsin fell 45% after a law pushed by Gov. Scott Walker made membership optional. While some of the decline was due to layoffs, much of it came after the state stopped collecting union dues from paychecks.

An Afscme spokesman said the drop in Wisconsin membership represents a snapshot and doesn't take into consideration the recent organizing of thousands of new members. He also said some members could be reinstated if a federal judge strikes down part of the law that has been challenged.

The rebukes to labor Tuesday came in two distinct parts of the country. In Wisconsin's recall election, Gov. Walker, a Republican, held on to his seat after he ushered in cuts to public-worker bargaining rights, pensions and health-care benefits.

In San Jose, Calif.—where registered Democrats outnumber Republicans—voters overwhelmingly approved a ballot measure to force city workers either to pay significantly more toward their pensions or accept more modest benefits.

And in San Diego, voters backed a measure that will put many newly hired city workers into a 401(k) retirement plan rather than the guaranteed pensions current employees receive.

"Liberals and conservatives all understand the same thing: We have had to cut services to pay for pensions," said San Jose Mayor Chuck Reed, a Democrat.

The shifting tide hasn't hit all parts of the country. In Ohio, voters in November overturned a law that limited public-employee unions' bargaining rights. Polls suggest the country remains divided over curbing the power and benefits of union workers.

Labor officials on Wednesday played down the significance of the Wisconsin defeat.

"Even with this loss, Wisconsin's voters have sent a clear message that attacks on workers' rights will not go unchallenged," said Gerald McEntee, the president of Afscme. He said Mr. Walker had "ended more than a half century of labor-management cooperation in state government," but that the union would continue to fight to win back government-worker bargaining rights.

Afscme saw membership drops in other states that are politically important and tend to be labor-friendly. In the 12 months ended in February, Ohio's membership fell 8.5%, Pennsylvania's dropped 3.4% and Michigan's declined 11.7%. In California, membership rose 2%.

Coming public-sector union battles are expected in a range of states, including Michigan, New Hampshire, Florida, New Jersey and Pennsylvania. In many cases, the initiatives aimed at trimming union rights or benefits wouldn't be as far-reaching as Gov. Walker's. Some political experts say that could help the new efforts pass more easily.

In Michigan, Republican Gov. Rick Snyder's office on Wednesday reiterated he doesn't intend to pursue a right-to-work bill because "it would be too divisive and create a lot of unproductive fighting," a spokesman said. Right-to-work laws forbid labor contracts that require all employees be union members.

But there is support among many Michigan lawmakers to scale back pensions for government employees and eliminate automatic dues deductions for teachers' unions. Mr. Snyder already eliminated collective-bargaining rights for home-health-care and child-care workers with an executive order last year.

"Michigan is a state that has taken the death by a thousand cuts approach," said Naomi Walker, director of state government relations for the AFL-CIO. She said unions are mounting an effort to get an initiative on the November ballot that would amend the state constitution to protect collective bargaining.

In New Jersey, lawmakers are considering a bill that would allow cities to consolidate services, which could lead to job cuts and eliminate protections for unionized workers such as compensation for layoffs.

In Pennsylvania, Republican lawmakers are pushing an effort to give state workers 401(k) retirement plans instead of defined-benefit pensions.

In a sign that public sentiment had shifted, San Jose's police union decided not to campaign aggressively against the city's pension measure because officers knew it was an uphill battle to persuade voters, said union president Jim Unland.

The union now is focusing on preparing a legal challenge to the pension changes, which Mr. Unland said violate basic contract law.

San Diego Mayor Jerry Sanders, a Republican, was surprised by how much support his city's pension measure received given there are more registered Democrats than Republicans in the city. "Anytime you get 66%, it means people were pretty fed up with something," he said.

The economic impact of the shift could ripple out. Justin Wolfers, an economist and associate professor at University of Pennsylvania's Wharton School of Business, estimates that being in a union gives workers wages that are about 15% higher than nonunion workers'.

Some analysts cautioned against overstating the significance of the Wisconsin vote. They say the recall focused more on Mr. Walker than on collective-bargaining rights. They also note that lawmakers elsewhere may not want to provoke a costly battle against unions.

"With the vote that we had here in Ohio that would not be likely something we would undertake," said Republican House Speaker William Batchelder of trying to pass certain provisions to trim union rights. But he said lawmakers could consider making changes to pension plans and have commissioned a study on the subject due out in July.
—Michael Corkery, Erica Orden and Daniel Lippman contributed to this article.

Tuesday, June 5, 2012

Brazilian economy losing steam

As it happened in the USA, then Europe, the Bricks are about to get their turn in financial distress. Aivars Lode

The Western Hemisphere’s economic darling may be losing its shine.
Brazil’s economy has slowed considerably in recent months, according to the latest statistics. Government figuresshow g Brazil’s economy grew only .2 percent in the first quarter of 2012, compared to a meager 1.4 percent in the fourth quarter of 2011.
In a report issued Monday, Well Fargo pinned much of the problem on a plunge in the South American giant’s farming and cattle industries, as a weakening global economy cuts into demand. Manufacturing continues to grow, but the gains are slowing. The best performer in Brazil: government spending, which increased 1.5 percent. That means the public sector is preventing an even worse slowdown. Consumer spending grew by 1 percent in the first quarter.
A slowing economy has sent the real down 21 percent against the dollar since the summer — from 1.58 per dollar to $1.98, according to Wells Fargo.

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