GM-UAW Pact Is Called Good for Both : Autos: Analysts say the tentative contract would soften the blow of potential layoffs for workers and improve the firm’s position to compete.
A tentative labor agreement between General Motors Corp. and the United Auto Workers appears to make the best of a bad situation, softening the landing for a shrinking work force and letting GM take steps to strengthen itself.
The pact contains a $4-billion job and income safety net for current workers, significantly expanding plans already in place, while clearing the way for GM to continue to slash the size of its work force.
The tentative accord also sweetens the pension plans to lure workers into retirement, leading to a younger, healthier work force that theoretically should help shrink the competitiveness gap between GM and the Japanese.
Given the questionable outlook for the auto industry, “it’s a win-win deal,” said Sean McAlinden, a labor economist at the University of Michigan.
The agreement, reached early Monday after a marathon negotiating session, was easily approved Tuesday by 400 local union leaders meeting here. It goes to a vote by some 300,000 workers within two weeks.
The UAW will try to duplicate the agreement in coming weeks at Ford Motor Co. and Chrysler Corp. The fatter pensions and other provisions could be damaging to hard-pressed Chrysler, and observers predicted that union leaders will give the smaller auto maker some relief.
The main element of the GM agreement is a network of job and income protection schemes that are backed by a commitment of up to $4.013 billion from GM over the three-year agreement. It was described as a major increase over GM’s current commitment, but no comparisons were available.
The tentative agreement adds several wrinkles and enriches a number of existing programs put together during the 1980s to help different categories of workers as the domestic auto industry retrenched.
One key improvement guarantees that workers laid off during the agreement will get virtually a full paycheck for as long as the layoff lasts. Such aid has dwindled in recent years as a special layoff fund has shrunk.
However, the big gains claimed for the tentative pact cover only the 280,000 workers now on the job, not the 30,000 on layoff. Those workers get a separate package of beefed-up layoff pay.
“There’s more money here but there aren’t that many new principles,” said Harley Shaiken, professor of labor relations at UC San Diego. “My sense is that GM is paying $4 billion to downsize its work force through attrition and buyouts.”
Though it is billed as an effort to create job security, some described it as just a temporarily guaranteed paycheck. For example, the agreement limits to 36 the number of weeks a worker can be laid off in three years. But if no job is available after 36 weeks, the laid-off worker is put in an existing “jobs bank” and continues to draw a paycheck while not working.
The fate of such workers would then be subject to renegotiation when the labor agreement expires in 1993.
“When you stand back and look at the American scene, this is just another severance package. It’s a burlap parachute,” said Dan Lacey, editor of the newsletter Workplace Trends, referring to wholesale job losses at major corporations across the country.
Despite the potential price tag of $4 billion to pay people for not working, Shaiken and others described it as readily affordable by GM. That is a worst-case figure, and it could be far cheaper if GM turns out to be at the bottom of its slide in the auto marketplace, as some sales analysts believe.
And some, such as McAlinden, contend that GM has “bought itself some trust” with the union that will stand it in good stead on the factory floor as it attempts to build cars more efficiently.
Moreover, proponents argued that it creates incentives for GM to find ways to save jobs by imposing penalties for eliminating them. Toward that end, the union retained a requirement that GM hire one laid-off worker for every two who leave by attrition.
“If they can manage well, it could cost them a hell of a lot less,” said Donald Ephlin, the retired head of the UAW’s GM department. “There are incentives to do it right.”
However, the tentative agreement clearly reflects a recognition of the deep troubles in the U.S. auto industry on the eve of a likely recession as it struggles to compete with an invasion of Japanese-owned, non-union auto plants in this country.
GM, whose hourly employment has tumbled by 170,000 since 1979, has indicated it wants to eliminate 60,000 more jobs in three years. It says it could do that and build the same number of vehicles it does now. The company’s 4% annual attrition rate and the inducements for workers to retire will go a long way toward reaching that goal, observers said.
“GM’s betting that the (improved) pensions can speed up the retirements,” said Ephlin. “Even if you have to replace them one for two, they’ll be shrinking at a pretty good rate.”
As many as 20,000 workers age 50 or older might take advantage of the sweeter pension deal, union officials estimated.
“We think with this pension arrangement, at least 400 of our members will retire,” said George Sailer, shop chairman of UAW Local 14 in Toledo, Ohio, where 4,300 workers make automatic transmissions for GM.
The agreement boosts the monthly payments for those retiring after 30 years to $1,800 from $1,500. It also establishes a voluntary “pre-retirement leave” at 85% of straight-time pay to encourage certain senior workers to “grow into retirement,” in the union’s words.
Though a summary of the complex proposed contract made no apparent mention of a moratorium on plant closings, UAW GM Vice President Stephen Yokich said the agreement includes the same limits on plant closings that existed in the current contract. However, GM has used loopholes in that agreement to close four factories.
Other elements of the tentative agreement:
- A stronger UAW voice in whether to build products in-house or contract them to other companies, giving the workers a chance to work with GM plant management to bid on such work and prove that they can build the product competitively.
- A tighter absenteeism policy that permits suspension without pay after 16 unexcused absences and firing after 21 such absences a year.
- A 3% increase in base wages the first year and 3% lump-sum payments the second year. With cost-of-living increases based on 4% inflation, the average wage of an assembler would rise to $17.88 a hour from about $15.70 in three years. An assembler would also get $3,810 in various bonuses.
