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Auto negotiations.

Auto negotiations United Automobile Workers' (UAW) agreements for some 500,000 workers at General Motors (GM), Ford Motor Co., and Chrysler Corp. expired September 14, the first time in 11 years that the three contracts expired on the same date. Job security and cost-of-living adjustments on pensions were expected to be key negotiating issues, with wages, job safety, and time off as other important topics.

The UAW began contract negotiations with the three automakers in mid-July. This year's "strike target" (the company the UAW focuses on in negotiations) was GM. (In selecting a strike target, the union traditionally picks the company that best fits its bargaining goals and strategy.) GM was chosen because of its size, large parts operations, and its history of plant closings and layoffs since the 1987 contract was signed.

In early August, GM had sustained a 6-day job action by UAW members at its Flint, MI, plant that ended only after the automaker agreed to invest $20 million in new manufacturing technology, to accept strict local limits on "outsourcing" (buying auto parts from outside suppliers), and to guarantee jobs to the 2,800 employees at the Flint plant through 1996. At its peak, the stoppage led to layoffs at 16 other facilities. Many industry observers viewed the job action as the UAW's signal of their determination to gain improved job security during national auto negotiations.

As it usually does, the UAW broke off contract talks with the other automakers, and concentrated on signing an agreement with GM before the expiration date of the 1987 contract. When negotiators failed to reach an agreement by midnight September 14, the union extended the strike deadline on a day-by-day basis (an unusual, but expected move) until an accord was reached.

The new 3-year agreement provides enhanced income and job security for GM's 300,000 salaried employees represented by the UAW, in exchange for a reduction of the work force through attrition and "buyouts" of older workers. The contract enhancements demonstrate the UAW's "building-block" approach to bargaining, in which the union first negotiates a basic benefit and then improves upon the level of the benefit in subsequent negotiations. (Industry analysts were speculating that GM's goal was to close three plants and to cut its work force by 60,000.)

Under the new income and job security program, GM will spend about $4 billion (up from $2.3 billion under the old contract) to guarantee income to senior employees. In addition to restricting layoffs to no more than 36 weeks over the term of the contract, the agreement provides laid-off workers with up to 36 weeks of supplemental unemployment benefits (SUB) equal to 95 percent of their take-home pay during the time they are laid off. After the 36 weeks, employees will be paid at 100 percent of their take-home pay during the term of the contract if they still are on layoff status.

To encourage employees to retire early, the maximum monthly pension benefit for early retirement (under age 62 with 30 years of service) will be increased by $300 (to $1,800) over the term of the contract, and restrictions on outside income (the amount an employee is permitted to earn before sacrificing benefits) will be raised from $3,000 to $15,000. The agreement also calls for "pre-retirement" leave that permits older employees to leave their jobs and receive 85 percent of their full-time pay until they are eligible for retirement, with their positions being filled by laid-off GM workers; a reduction in the minimum retirement age, from 55 to 50; a $3,000 to $7,000 increase in payments under the voluntary separation program (Voluntary Employment Termination Program), under which employees are given a lump-sum payment to quit, with a maximum "buyout" of $72,000 (was $65,000) and 6 months of free basic health care insurance coverage for employees with at least 25 years of service.

New contract language dealing with job security provides for the right to submit outsourcing disputes to arbitration; increased "insourcing" (use of GM employees to do work previously performed by a subcontractor) and use of GM employees to do new work; and an increase in the hourly excess overtime penalty (previously, $1.25 an hour for all hours of overtime), to $1.25-$5, with the actual rate depending on the number of excess overtime hours. (The penalty, which is levied in an effort to decrease overtime and enhance job opportunities, is paid into the Joint Skill Development and Training Fund.) The agreement also maintains the "one-for-two" attrition formula that requires GM to hire one worker for every two who die, retire, or quit. In addition, the contract retains language barring plant closures, even though GM had found a loophole in the same language under the prior agreement and "indefinitely idled" four plants rather than "closed" them.

The contract calls for improved benefits for currently laid-off workers. The currently laid-off workers who are between the ages of 50 and 61 and who have at least 10 years of service will be eligible for special retirement during a preset retirement "window." The currently laid-off workers with at least 10 years of service who are not eligible for retirement will be eligible for an additional 52 weeks of extended SUB or special lump-sum payments if they voluntarily quit their jobs under the voluntary separation program, while those with fewer than 10 years are eligible for an additional 26 weeks of extended SUB, or a special payment under the voluntary separation program. Over and above these benefits, workers who were laid off at the four plants idled during the 1987 contract are eligible for an additional 12 weeks of SUB, and have preferential hiring rights to openings at other GM plants.

Other contract terms include a 3-percent general wage increase in the first year, lump-sum payments in the second and third years equal to 3 percent of an employee's gross earnings in the preceding 12 months, and the roll-in to wages of $1.68 of the $1.73 in COLA earned under the previous contract (current average hourly earnings reportedly are $15.75); a $4.45 increase (to $30.70-$31.45) over the term of the contract in the monthly pension rate for each year of credited service for future retirees (employees retiring after October 1, 1990); for current retirees, a $1.25 increase in the monthly pension rate for each year of credited service, with a minimum $20 monthly pension rate (previously, the highest minimum was $16, and some employees received less), and annual lump-sum payments of $630 in the second and third years of the contract; a $1,100 minimum monthly pension for current retirees under "30-and-out"; maintenance of the major current health care provisions (GM had proposed an employee health care copayment), with an increase in dental benefits and a new mental health and substance abuse program; improvements in the profit sharing plan, including benefits calculated on a "first dollar" basis (previously, calculated after profits were above 1.8 percent of sales) and an increase in maximum payout (from 16 percent of profits on sales to 17 percent); elimination of the $600 annual bonus for perfect attendance in exchange for $600 Christmas bonuses in 1991 and 1992; increases in life insurance coverage, sickness and accident insurance benefits, extended disability benefits, and survivor income benefits; establishment of a nationwide joint labor-management ergonomics program; and a child care program on a test basis.

The 1987 contracts with Ford and Chrysler were automatically extended beyond the September 14 expiration date while the UAW completed negotiations with GM. In the past, the union has taken the agreement with the target company to the two other automakers and modified it as necessary to reach an agreement. By the end of October, Ford and Chrysler had both signed tentative 3-year agreements with the UAW that reportedly mirrored the GM contract.

"Developments in Industrial Relations" is prepared by Michael H. Cimini of the Division of Developments in Labor-Management Relations, Bureau of Labor Statistics, and is largely based on information from secondary sources.
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Title Annotation:Developments in industrial relations; General Motors Corp.-United Automobile Workers contract
Author:Cimini, Michael H.
Publication:Monthly Labor Review
Date:Nov 1, 1990
Words:1344
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