The ongoing coronavirus pandemic has hit businesses hard, and that includes General Motors. The automaker recently announced that it was suspending North American production, as well as drawing $16 billion in credit in order to “fortify its balance sheet” in the face of the chaos created by the spread of the virus. Now, a new report indicates that GM employees are next in line to face the economic consequences of the virus as the automaker mandates sweeping salary reductions.
According to a new post from Jalopnik, GM employees were recently informed of a wage reduction plan that includes a “20-percent pay deferment” for salaried workers operating at home, beginning April 1st. These GM employees will then receive their cut wages as a single lump sum, which will be repaid between Q4 of 2020 and Q1 of 2021, with interest.
A few weeks ago, GM issued a notice to employees which stipulated that all workers should work remote, if possible.
The new report also says that the roughly 6,500 U.S. GM employees who can’t work from home, the majority of which are in manufacturing and engineering roles, will incur a 25-percent salary reduction as part of what is referred to as the “Salaried Downtime Paid Absence” policy. The reduced salary is intended as an alternative to unemployment benefits.
Furthermore, the notice indicates that GM executives in the Senior Leadership team will see a 25- to 30-percent pay cut. The Board of Directors will also get see a 20-percent pay cut.
Healthcare benefits will not be impacted by these compensation reductions.
Meanwhile, GM production operations are drawing down across North America, including in the U.S., Canada, and Mexico. GM recently issued a schedule for plant closures in Mexico, with a total shut down expected by March 30th. Originally, a tentative resumption of GM production was expected by the end of March, but now, it’s believed that operations will not resume until well into April at the earliest.