The gloom that had built up around impoverished New York's labor negotiations lifted early this morning when Mayor Edward Koch announced a transit agreement he thinks the city's Washington creditors will find acceptable.
The agreement with the city's 33,000 bus and subway workers is likely to be the model for contracts with about 50 municipal unions still to be negotiated here this year.
Koch called the settlement "responsible and reasonable" and said the 50-cent fare would not be increased before 1980. It had been widely expected that a fare increase would be imposed next year.
Matthew Guinan, leader of the Transport Workers Union, predicted his memberships would "overwhelmingly" accept the contract.
No details of the contract were announced officially, but the Associated Press reported that its sources said it provides an immediate $250 bonus to each worker, a 6 per cent annual pay raise equaling $900 to $1,000 per worker to take effect in three months and payment of cost-of-living adjustments that had been suspended in the expired contract.
In addition, in the last nine months of the new two-year contract, there will be cost-of -living payments if the transit system has made productivity savings to pay for them. A three-member panel will monitor productivity.
The estimated cost of the new contract is between $90 million and $100 million. The salary increases is about one-third what the union had claimed it needed to restore purchasing power to the 1974 level before New York's financial crisis struck.
The transit workers, with their power to cripple the city, were an enormous first hurdle for Koch in this long year of labor negotiations. His success is averting a strike without giant wage increases appears a significant achievement for the new mayor.
Senate Banking Committee Chairman William Proxmire (D-Wis.) and other members of Congress who believe New York spent itself into financial collapse in large part through overly generous settlements with unions, are the most important judges of whether Koch was tough enough.
In defending the new contract, city officials will point out that all of its increases except the one time 6 per cent raise restore benefits promised in the past and revoked during the fiscal crisis or will be paid for with money saved elsewhere.
Critics who charged New York with profligate ways have urged such a course on Koch in his labor negotiations.
One of Koch's popular campaign planks last summer was a promise to get tough with unions, whose leaders opposed his candidacy.
Brightening the picture for the city further is the manner in which the transit negotiations were conducted. The city and the municipal unions, which represent more than 200,000 workers, recognized that the transit settlement would set a pattern for other contracts this year, so the municipal labor leaders were kept closely informed as the transit talks progressed.
The city knew municipal unions would demand wage increases comparable to those won by transit workers. Each one-percent increase for the bus and subway workers costs $8.1 million, while each percent raise for the municipal workers costs about $40 million.
On the other hand, the transit talks were followed so closely by municipal union leaders that the transport workers could not easily agree to less than what their municipal brothers will in turn gruddingly accept.
The municipal contracts expire June 30, but the city wants to reach agreement soon so it can go to Washington in search of aid with precise figures for its costs in the coming year.