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General Motors Company (GM) and Ford Motor Company (F) Are Studying Lower-Pay Tier For UAW

Viraj Shah :Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) are trying to convince the United Auto Workers Union to create  a fresh tier of lower-paid workers to help costs. This new category would be for the factories in the United States, Bloomberg reported quoting people who were familiar with the events. Both Ford and GM need to lower costs to compete with the European, as well as, Asian peers and they were looking at the creation of new lower pay scale to cut down labor costs.

Demand For Increase

General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) believe that their rivals in the two regions were paying less. However, the Union is said to be looking for an increase in wages. The Union seeks $28 an hour for both its top paid assembly workers, as well as, lower-paid second tier, who were getting $19.28.

While the two big automakers in the Americas were trying to create a fresh lower tier, the UAW leaders were pushing the elimination of the second tier. Therefore, it could be a tough proposition for the two automobile companies to convince the leaders of the union especially during the time of a wide disparity in income growth in the Americas. The union has also been under pressure from its 80,000 members for a pay rise and the elimination of the second tier. The union did not have any agenda as far as hiring of new workers was concerned.

Companies Pushing Their Agenda

General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) were trying to write a fresh labor deal of their own, a former negotiator for GM, Art Schwartz, said. The union would be arguing in favor of a pay hike citing lack of support to run a family with the wages earned. Therefore, there was a sense of believing that the Union would not likely to encourage a further lower pay or increased divisions among the workers. GM is already having some employees working on the segment.