Canadian union accept wage freeze deal with GM

REUTERS  - Canadian autoworkers will face a wage freeze through 2012, along with shorter vacations and higher contributions to benefit plans under a tentative deal with General Motors Canada, the Canadian Autoworkers Union said on Sunday.

The deal, seen as a pattern for pacts with other auto companies, aims to unlock billions of dollars in Canadian government funding for General Motors. Unionized workers will vote on the pact on Tuesday and Wednesday of this week.

“The alternatives are much worse,” CAW President Ken Lewenza told a news conference announcing the agreement, which was reached after round-the-clock negotiations with the company, which has some 10,000 workers represented by the CAW.  “We’ve done what we can do as a union... Now the Canadian government has got to step up to the plate.”

The Canadian units of GM and Chrysler are seeking as much as C$10 billion from the Canadian and Ontario governments to help them survive the crisis facing the auto sector.

The payments hinge on the companies making savings that will include concessions from unionized workers. But federal Industry Minister Tony Clement gave no clue as to whether the tentative deal would be enough to unlock government funds.

“My officials and I continue to work closely with GM as we continue our due diligence,” he said in a statement.

“We will ensure that there is a viable long-term sustainability plan involving all stakeholders in place before we commit any taxpayer dollars.”

GM has already proposed a 10 percent cut in executive salaries, and reduced pay and benefits for salaried employees.

The deal with the CAW, which represents about 33,000 workers in the Canadian auto industry, will extend an existing contract with GM Canada by one year until September 2012. It freezes wages and most cost of living adjustments and boosts worker co-payments for a range of healthcare provisions.

“Together these changes represent a major sacrifice by our active members and retirees,” CAW’s Lewenza said in a statement. “They will reduce active hourly labor costs by several dollars per hour, reinforcing Canada’s investment advantage relative to U.S. facilities. And they will significantly reduce the company’s legacy costs associated with pension liabilities and retiree health benefits.”

The CAW hopes the agreement will form the model for pacts with other auto firms, and the union said it would open talks with a second auto firm later this week.

It has said it hopes to reach deals with the Big Three automakers by the end of this month.

Auto sector labor agreements reached last year had already frozen wages, shifted more health care costs to employees, and deferred cost of living allowances for the first year of the contracts, among other initiatives.

The new deal extends that wage freeze for another year and delays cost of living allowances further. It again boosts worker healthcare costs and cuts vacation time by an additional 40 hours a year.

GM and rival Chrysler have already received a combined $17.4 billion from Washington, have sought another $22 billion in emergency funding. That amount could increase to about $30 billion if the auto market deteriorates further.