A look at the most important terms of the new UAW/GM contract
While the actual contract between General Motors and the UAW is likely longer than any sane person would want to sit down and read, we can pull out the key factors that caused the two parties to come to terms. General Motors wanted to avoid giving the workers mandatory annual raises because in years where the company struggles, being forced to hand out raises 50,000 workers can further complicate a bad situation. The automaker hoped to use massive bonuses in lieu of annual raises and with respect to that angle, GM got what they wanted. However, in getting the UAW to agree to a lack of required annual raises or cost of living raises, GM had to offer record signing bonuses, a minimum wage increase, lump sum cost of living bonuses from 2012-2014, a $3,500 profit sharing bonus in 2012, added non-cash benefits, and $2.5 billion worth of improvements to US plants – expected to create or preserve around 6,400 jobs.
Major terms of the new GM/UAW contract, effective immediately upon signing and expiring in 2016
The General Motors UAW workers will reportedly receive a $5,000 signing bonus when the new contract is finalized and approved by all plus a profit sharing bonus of no less than $3,500 in the first quarter of 2012. On top of that, the workers will receive an addition bonus of $250 if certainly quality goals are met at year’s end. Profit sharing is expected to be the big gain for workers and the new contract limits those annual bonuses to $12,000.
A minimum wage increase affects those new workers who will now hire in at $15.78 an hour as opposed to the previous rate of $14.00 per hour – an increase of 12.5% for new entry level worker. In addition to the pay hike, new employees with receive improved healthcare benefits and a new tuition assistance program. Also, where entry tier workers at GM were previously only able to reach $16.00 an hour, the new contract allows those workers to earn as much as $19.28/hour. This portion of the deal will affect roughly 2,500 current workers and thanks to GM making this adjustment of the entry level pay and benefits, the automaker has maintained their controversial two tier payment plan.
Rather than promising costly annual raises that can hit an automaker hard in bad years, General Motors will pay their workers $1,000 lump sum bonuses in 2012, 2013 and 2014 in place of annual cost of living raises. This way, GM knows exactly how much they will incur in these cost of living expenses as opposed to raises that can vary from year to year.