US Unions Threaten Action As Bp Cuts Health Bill

BP has angered trade union leaders in America by revealing plans to cut its contribution to health care schemes in a move affecting 25,000 staff and 50,000 retirees.

Britain's biggest company, which is heading for record profits this year on the back of high crude oil prices, said it will also stop making any health care contributions for staff taken on after April 1, 2004.

The oil major said it could no longer keep up with soaring insurance costs in the US and was only doing what many top companies had already done.

But the Paper, Allied-Industrial Chemical & Energy Workers International Union, Pace, said it was unfair for "the richest industry in the world to bloat profits" in this way. When BP bought Amoco and Arco, it signed union agreements to harmonise the benefit plans, including retiree health insurance, according to Bill Phillips, Pace's BP council chairman.

"Now the company is taking it away. These proposed changes not only harm every retiree who ever worked for Amoco, Arco or BP but steal the hopes and dreams of the current workforce," he argued.

The planned changes raise the share of health care costs paid by employees and retirees from 20% to 30% via 2% annual increments over the next five years.

Pace, which represents 3,500 of the BP workforce in America, said it wanted immediate talks with the company over its plans, which were outlined in individual letters to employees. The union is considering organising rallies and pickets to draw attention to the issue. However, BP said it was unfair to single it out, given that only 150 out of the Fortune 500 companies still provided this kind of retirement health care coverage.

"We are doing this because medical insurance costs rose 16% in 2003 and have risen by double digit figures annually over the past three years.

"It is necessary for us to take steps to contain the costs to the company and to ensure the rest of our staff benefits are kept at a high quality," said a spokesman.

BP retirees would continue to have access to programmes that allow them to manage their medical bills by choosing lower cost, generic prescriptions and obtaining them through a discounted mail order scheme, BP added.

A recent survey conducted by subsidiaries of US bank Wells Fargo found that more than half of employers had cost increases of more than 13% over the past 12 months and nearly a quarter had increases of over 20%.

But the union said the company could not claim to want to motivate staff and provide a good place to work while it was cutting costs in this way.

Chief executive Lord Browne announced a 42% increase in profits to $3.12bn (£1.87bn) for the second quarter while revealing plans to inject up to $2bn to plug a gap in its American pension fund.

The British company is on course to post record profits this year - despite warning that earnings were being affected by the weaker dollar and a squeeze on its petrol retail business.