General Motors Not Seeing Savings From Unions

According the Wall Street Journal, General Motors is not seeing savings from union cutbacks it made three years ago. The deal, agreed by both GM and the UAW, included wage and benefit cuts for new workers – down to $25.65 an hour (from $60 an hour), shifting retiree healthcare payments to a union-run trust fund, and phasing out the job bank. The latter came with the understanding that GM will pay some wages and benefits to laid-off workers. Currently, 5,000 laid-off workers receive as much as 70 percent of their on-the-job pay for the first year and as much as 50 percent for the second year – depending on the worker’s position prior to layoffs.

The second part has a clause wherein laid-off workers have the first chance to any new job opening at The General within two years of being laid off. In fact, GM has been hiring back laid-off workers in this fashion before the agreement was made, but no new workers have been rehired at the lower rate. As such, General Motors is not sure when it will be able to hire new workers, but according to GM spokesperson Kim Carpenter, [When it does], “it will be a competitive advantage for us”.

As GM begins to turn a profit and works to improve supplier relationships, the question will eventually migrate to be something along the lines of “just how much of that profit will go the way of the union and laid-off workers?” And if you think about it – the clause in the agreement for the rehire of laid-off workers is a job bank in new clothing. So it would seem that The General is playing a waiting game when it comes to new workers that can be hired at a lower wage.