Case Study- Health care - Business or Employees

By February 2004 strike by southern Delhi grocery workers against the state's major supermarket chains was almost 5 month old because so many workers were striking (70,000) and because of the issues involved, unions and employers across the country were closely following the negotiations. Indeed, grocery union contracts were said to expire in several cities later in 2004, and many believed the Delhi settlement-assuming one was reached-would set a pattern.

The main issue was employee benefits, and specifically how much (if any) of the employees health care costs the employees should pay themselves. Based on their existing contract, southern Delhi grocery workers had unusually good health benefits. For example they paid nothing toward their health insurance premiums, and paid only Rs 420 co-payments for doctor visits .However, supporting these excellent health benefits cost the big Southern Delhi grocery chain over Rs168 per hour per worker.

The big grocery chains were not proposing cutting health care insurance benefits for their existing employees. Instead, they proposed putting any new employees hired after the new contract went into effect into a separate insurance pool, and contributing Rs56.7 per hour for their health insurance coverage. That meant new employee's health insurance would cost each new employee perhaps Rs420 per week. And, if that Rs420 per week wasn't enough to cover the cost of health care, then the employees would have to pay more or do without some of their benefits.

It was difficult situation for all the parties involved. For the grocery chain employers sky rocketing health care cost per undermining their competitiveness; and the current employees feared any step down the slippery slope that might eventually mean cutting their own health benefits. The unions did not welcome a situation in which they'd end up representing two classes of employees, one(the existing employees) who had excellent health insurance benefits, another(newly hired employees)whose benefits were relatively meager and who might therefore be unhappy from the moment they took their jobs and joined the union.
Q 1Assume you are mediating this dispute. Discuss three creative solutions you would suggest for how the grocers could reduce the health insurance benefits and the cost of their total benefits package without making any employees pay more?
Q2- From the grocery chains point of view, what is the downside of having two classes of employees, one of which has superior health insurance benefits? How would you suggest they handle the problem?