UAW Contract Analysis

UAW Makes Significant Gains in New Contract

By: David Dayen Sunday September 18, 2011 3:42 pm

The successful auto industry rescue is definitely a feather in the cap for the Administration, protecting up to a million direct and indirect auto industry jobs, and putting GM and Chrysler in a position to succeed. Now there’s a new contract with the United Auto Workers to share the success with labor.

One criticism of the rescue was that the UAW was forced to give up good wages for new employees and accept a two-tier structure for pay and benefits. But unless I have my timeline wrong, that all happened in a contract prior to the decision to forward additional loans to automakers in 2009. That contract expired, and the UAW just inked a new deal with GM that should serve as an industry standard. And they made some significant gains in this contract, a testament to how far back the industry has come.

The United Auto Workers union won $5,000 signing bonuses for its workers and a promise to reopen an assembly plant in Tennessee as part of its tentative new contract with General Motors, according to people briefed on the negotiations.

In what is being viewed as a landmark deal, the union also preserved health care and pensions and improved profit-sharing for its roughly 48,000 members who work at G.M. […]

The union’s president, Bob King, said in a statement that union members would get a larger share of the profits from G.M.’s comeback from its federal bailout and bankruptcy in 2009.

“When G.M. was struggling, our members shared in the sacrifice,” Mr. King said. “Now that the company is posting profits again, our members want to share in the success.”

“I think the U.A.W. went way beyond holding the line here,” said Harley Shaiken, a labor professor at the University of California, Berkeley. “The union made some real gains in the contract in the context of where G.M. becomes a more competitive company.”

This is an unusual circumstance in labor deals of recent vintage. Previous efforts focused on just protecting whatever meager gains had been achieved in past contracts, and accepting as minimal losses as possible. This looks like a good deal on the merits, with increases for entry-level workers up to $17/hour, signing bonuses and increased profit-sharing. And there’s a significant series of promises to in-source jobs, moving them back from overseas.

So it’s a tangible victory for workers that will probably ripple industry-wide. And the Administration deserves credit for staying the course on the auto industry rescue, to the extent where GM and Chrysler are on a path to profitability and workers are sharing in the rewards.

It’s also a reminder that linking productivity and wage growth has a lot to do with collective bargaining to ensure that relationship. In an individualistic world where the wage-earner has no leverage, the productivity gains drift to shareholders and executives.

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