EXCLUSIVE Biden’s emergency board calls for railroad wage hikes to resolve contract talks

U.S. President Joe Biden rides Air Force One as he departs for Washington, DC from Joint Base Charleston, South Carolina, U.S., August 16, 2022. REUTERS/Joshua Roberts

WASHINGTON/LOS ANGELES, Aug 16 (Reuters) – U.S. President Joe Biden’s emergency council tasked with helping major freight railroads and unions break a stalemate in contract talks offered raises on Tuesday annual wages of between 4% and 7% until 2024, according to a report seen by Reuters.

The council also recommended in its 119-page report due to be made public on Wednesday a retroactive increase of 3% for 2020 and 3.5% for 2021, when the railway workers did not have a contract, as well as five annual bonuses. $1,000 and an additional paid day off.

Talks between major freight railroads, including Union Pacific (UNP.N)owned by Berkshire Hathaway (BRKa.N) BNSF and CSX (CSX.O)and unions representing 115,000 workers have been dragging on for more than two years.

Railroads move items ranging from Amazon.com Inc (AMZN.O) fuel oil and soybean packages. A lockout or strike could drive up the prices of basic necessities and disrupt US supply chains ahead of the midterm elections that will determine whether Biden’s Democratic Party holds tight control of the House of Representatives and of the Senate.

The report’s proposal represents a nominal salary increase of 22% over the five-year period, the report said. The board said it aimed “to act as honest intermediaries and to recommend fair and reasonable terms of agreement”.

Other recommendations include removing the cap on monthly employee contributions for health care so that they are equal to 15% of the schemes’ overall cost to provide covered benefits, and jointly re-launching contracts to ensure that current costs are competitive.

Earlier, the White House expressed optimism that a deal could be reached.

“The president is optimistic that the report will provide a good framework for successful negotiations between the parties over the next 30 days,” the official said, adding that the recommendations had been conveyed to the White House and the parties.

Biden appointed the three-member presidential emergency council in July to reduce transportation disruptions that are fueling inflation and threatening food and fuel supplies.

Work stoppages are prohibited for 30 days after the release of the Presidential Emergency Committee (PEB) report to give both sides time to reach a voluntary settlement. If employers or unions reject the council’s recommendations, Congress can intervene.

“To avoid a nationwide rail shutdown, it is in the nation’s interest that the parties reach a speedy resolution,” the White House official said.

Unions and rail groups involved in the talks did not immediately respond to requests for comment.

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“It is in the interest of all stakeholders that the parties reach agreements that provide our employees with well-deserved wage increases and prevent disruptions to rail service,” Union Pacific said in a statement.

Reporting by David Shepardson in Washington and Lisa Baertlein in Los Angeles; Editing by Chris Reese, Matthew Lewis, Aurora Ellis and Richard Chang

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