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Verizon offers freeze on job cuts

| Friday, Aug. 22, 2003

Verizon Communications Inc., the biggest U.S. local-telephone carrier, promised not to fire union workers before late 2004 if they agree to shoulder more of their health-care costs.

New York-based Verizon made the offers in contract talks with unions representing 80,000 Verizon workers throughout the northeastern United States, according to a letter sent this week by Verizon Chief Executive Officer Ivan Seidenberg to U.S. senators, and obtained by Bloomberg News.

The document offers a glimpse into negotiations that started mid-June and have remained largely under wraps. Verizon wants to contain $1 billion annual health-care expenses. The company also wants more flexibility in moving and cutting jobs as it loses local phone customers to competitors, some of whom lease its network at below-market prices set by regulators.

"This combination of a higher cost structure and forced subsidies has put us at an extreme disadvantage versus any of our non-union competitors," Seidenberg wrote in the Aug. 19 letter.

The correspondence violated a directive by federal mediator Peter Hurtgen, who asked both sides not to disclose information on the talks, the Communications Workers of America and the International Brotherhood of Electrical Workers said in a newsletter distributed by e-mail to members.

Seidenberg "undoubtedly knew that the specifics in the letter would be given out in work locations in an effort to confuse our members and influence the course of bargaining," the unions' statement said. CWA spokeswoman Candice Johnson declined to comment.

The letter was intended for Verizon senior managers and the senators, and not for external distribution, Verizon spokesman Eric Rabe said. He declined to discuss its contents, and said union leaders also had disclosed contents of the bargaining.

Verizon's proposal included "modest increases in some deductibles and co-pays" and a continuation of a "no-premium health care plan" for active employees and retirees for five years, according to the letter.

If the plan is accepted, union-represented employees would pay about 7 percent of their health-care costs, Seidenberg wrote. Under the current contracts, which expired Aug. 3, workers pay about 5 percent of their health expenses. Costs for employee doctor bills and other medical care increased about 12 percent last year, the company has said.

Verizon stock rose 25 cents to $36.05 in New York Stock Exchange composite trading. The shares have declined 7 percent this year.

According to the letter, Verizon offered no firings until October 2004; a provision to "keep jobs local" for 5 years; a lump-sum signing bonus; a provision to negotiate future wage increases; and an increase in the contribution for retiree health care to $21,000 from $11,400.

The unions started a Web site earlier this month to collect names of members and their families who'd be willing to switch phone service to AT&T Corp., a Verizon competitor, if union leaders say it's warranted.

Seidenberg wrote that he sent his letter in response to correspondence he received from lawmakers including Massachusetts Senator Edward Kennedy and New York Sen. Hillary Rodham Clinton, who said they're "troubled" over possible job losses and higher health-care expenses for their constituents.

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