United Auto Workers (UAW) union officials and ‘Detroit Three’ automaker executives begin contract talks today (13 July) with much of the talks expected to centre around the ‘two-tier’ wage structure agreed eight years ago in the midst of the financial crisis that led to GM and Chrysler bankruptcies.
The United Auto Workers argues the deal has enriched General Motors, Ford and Fiat Chrysler Automobiles at the expense of employees, the Wall Street Journal said.
Under the two-tier wage system, widely cited by the industry as a reason US automakers have added tens of thousands of factory jobs since 2011, new workers are paid a top wage of US$19 an hour and longer serving workers get $28. UAW president Dennis Williams has said he will work to close the pay gap, the WSJ noted.
Sources told the Journal healthcare packages are likely to be revised and profit-sharing agreements could be altered. After nearly a decade without a factory floor raise for veteran workers, the UAW plans to argue it’s time for the automakers to pay more.
The end of the current contract triggers a promise made by GM and Fiat Chrysler to cap their share of entry level – or Tier 2 – workers at 25% of their hourly production staff by September 2015. Ford has a different deal with the UAW and has begun shifting lower-paid workers to the higher wage tier.
GM, with only 19% of its factory head count classified as Tier 2, wouldn’t be immediately affected by the cap but it could be a major burden for Fiat Chrysler as the automaker tries to find a merger partner, the WSJ said.