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Old 01-29-2009, 01:37 PM   #1
AVANTI R5
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Default GM calls an end to ‘jobs bank’ scheme

Quote:
General Motors said on Wednesday that it had agreed with the United Auto Workers union to end a scheme that has allowed union members to collect virtually full pay and benefits even when there was no work for them in the carmaker’s assembly plants.

Known as the ”jobs bank”, the scheme has limited the savings to GM and the rest of the Detroit motor industry from plant closures. It has also become emblematic of the problems facing the industry in matching the competitiveness of foreign rivals whose US plants are not unionised

The jobs bank has increasingly been criticised as the blue-collar equivalent of executives’ much-maligned corporate jets.

Ending the jobs bank is among the conditions of $17.4bn in emergency loans granted by the US government to GM and Chrysler. The loans require the companies to achieve ”competitive” labour costs.

Chrysler said earlier this week that it was suspending its jobs bank.

Under labour contracts negotiated by the carmakers and some key suppliers over the past two decades, laid-off workers initially received 95 per cent of their take-home pay.

A portion came from state-run unemployment insurance, with the employer making up the rest. If the workers were not recalled after 48 weeks, they were transferred into the jobs bank, where they reverted to full pay and benefits, entirely funded by the employer.

Until the end of last year, their only obligation was to report to their plant each day, unless they opted for community service or retraining. The benefits have been whittled down as the carmakers’ financial problems have mounted. Since last year, workers have received 85 per cent of normal pay and benefits last year, and were no longer required to report to their plants.

GM’s jobs bank has shrunk from 7,500 workers in 2005 to 1,600. About 1,000 workers are affected at Chrysler. Industry-wide, the jobs bank covered more than 12,000 workers in 2005.

In spite of the GM and Chrysler announcements, laid-off workers will still enjoy unusually generous benefits.
GM said the jobs bank would be closed from Monday but that it would continue to supplement state benefits, allowing laid-off workers to draw 72 per cent of normal pay indefinitely.

Ford, the number-two Detroit carmaker which has not applied for government aid so far, said that it was ”in discussions with the UAW on different items”, but declined to elaborate.
http://www.ft.com/cms/s/0/25807f58-e...nclick_check=1
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