Car Workers Will Lose In Industry Bail-out

Sydney Morning Herald

Monday December 22, 2008

IAN MUNRO IN NEW YORK

US CAR workers have been the pace setters in winning advances in wages and conditions for decades, but the Administration's bail-out for car makers could end all that.

It has attached strings to its $US17 billion ($25 billion) rescue loans to General Motors and Chrysler that would cut the wages of union workers to those of their non-union counterparts.

Pay is to be brought in line with non-union workers employed by Asian and European makers in the US and work rules must be competitive with those at non-union plants, conditions tied to the loans say.

The president of the United Auto Workers, Ron Gettelfinger, welcomed the bail-out but said it singled out workers for unfair treatment.

In his weekend radio address, the President, George Bush, said he did not want to undermine the free enterprise system but it would be irresponsible to allow the car makers to fail in the middle of a recession.

"My economic advisers believe that bankruptcy could now lead to [the industry's] disorderly collapse - sending our economy into a deeper and longer recession."

He said that the necessary restructuring would demand concessions from all: management, financiers and employees.

However, a senior Democratic congressman, Barney Frank, accused Mr Bush of letting foreign companies dictate US wages and conditions. "The President has added an unfair assault on working men and women," he said.

Since World War II the car workers have wielded extraordinary power.

"They did create, probably more than any other union, the great industrial middle class in the 1950s, '60s and '70s," said Don Grimes, a senior labour researcher at the University of Michigan. "It really was the case that the prosperity of the middle class was the result of the union."

He said that the unusually generous benefits enjoyed by UAW workers could explain the indifference of other workers to their plight and the lukewarm support for the industry bail-out. Retired union workers, for example, had much better health insurance than any others, including federal government employees.

UAW workers are paid $US27 an hour, against about $US22 an hour for non-union workers, but the cost of retirees' health benefits pushes General Motors' effective hourly rate to $US72 an hour.

GM's labour payments had become lopsided, with active workers outnumbered by retirees by about four to one.

The UAW boasts of having made concessions to employers, including allowing newly hired workers to be paid at half the rate of existing staff. But the workforce has been shrinking, and new hirings are rare. Now it will be brought in line with non-union plants.

Mr Bush issued the industry lifeline after Republicans in the Democratic-controlled Congress blocked a deal last week.

An initial $US13.4 billion of the total package will be available this month and next to GM and Chrysler, which were facing imminent bankruptcy. Ford has asked for a line of credit from the Government, although it hopes to trade through next year unaided.

The companies have a deadline of March 31 to show that the restructuring will assure their survival, or the loans could be recalled.

While the companies have won time, the union has the option of seeking to modify the deal conditions with an appeal to Barack Obama, who will take over from Mr Bush on January 20.

Mr Obama also welcomed the bail-out and said that workers should not bear the brunt of restructuring. He hoped to create jobs within the car industry, he said.

© 2008 Sydney Morning Herald

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