US automaker GM offers 10% wage hike, workers’ union calls it ‘insulting’

In a bid to avoid a costly strike a which is inching closer to is deadline, GM offered workers a 10% wage hike and two additional 3% annual lump sum payments over four years in its offer to the union ahead of the Sept. 14 contract expiration. GM shares closed down 0.8% to $32.57.

Stuck in a similar deadline by auto workers, Ford announced to offer 9% wage increase through 2027 and 6% lump sump payments, much less than the 46% wage hike being sought by the union through September 2027. 

Earlier on Thursday, Ford said about 8,000 U.S. workers represented by the UAW will get an average $4.33 an hour in additional pay under provisions of the current contract agreed in 2019. Stellantis said it also raised pay this week for 4,000 workers per the 2019 contract.can

Meet the 46% wage hike demand or face strike, warns UAW

A total of 97% of members voted in favour of authorizing a strike if agreement is not reached, said UAW, reported Reuters. Ford was expected to make counter offer on Thursday, reported the news agency citing sources.

Shawn Fain represents 1,46,000 workers at the Detroit Three. Looking at the stark difference between the demand for hike and the percentage offered by GM, he called its offer “an insulting proposal that doesn’t come close to an equitable agreement for America’s autoworkers…. The clock is ticking. Stop wasting our members’ time. Tick tock.”

The UAW said the GM offer would change the formula for calculating profit sharing and if it had been in effect last year, workers would have received 29% less. The UAW also said Ford’s proposal would have cut profit sharing by 21%.

The union’s demand also include 205 immediate wage increase. It needs to be followed by four 5% annual wage hikes, defined-benefit pensions for all workers, 32-hour work weeks and additional cost of living hikes. On the other side, GM is proposing to give employees an additional paid holiday.

The UAW is also demanded permanent job for its workers, enhanced profit sharing and the restoration of retiree health-care benefits and cost-of-living adjustments.

GM calls the wage hike largest proposed since 1999

GM said the wage hike is the largest proposed since 1999. It is also offering a $6,000 one-time inflation-related payment and $5,000 in inflation-protection bonuses over the life of the agreement, along with a $5,500 ratification bonus.

Chrysler-parent Stellantis said Wednesday it planned to make a counteroffer to the UAW this week.

Under its offer, current temporary employees will get 20% increase to $20 per hour wage. Moreover, it would reduce time it will take to get to the maximum wages rate for permanent employees.

“We need a fair contract that both rewards our employees and protects the long-term health of our business,” said GM President Mark Reuss in a video message.

Auto workers strike in US can incur loss of over $5 billion, raise car prices

The UAW strike is a major challenge for auto makers. Earlier, sumilar strike led to the closure of Detroit Three manufacturers. This time, it can cost carmakers, suppliers and workers over $5 billion, Michigan-based Anderson Economic Group estimated, reported Reuters.

This can also lead to raise in car prices due to limited inventories of new cars, experts told Reuters.

Last week, the UAW filed unfair labor practice charges with the National Labor Relations Board against GM and Stellantis saying they refused to bargain in good faith.

Supply chain disruptions due to a potential UAW strike would choke the supply of new vehicle in the market. This will drive up used car prices and put pressure on margins in the personal auto insurance business, JP Morgan said on Thursday.

Updated: 08 Sep 2023, 07:23 AM IST