Auto workers will suspend a program that paid workers for no work, and let companies delay health-care payments By David Welch
On the eve of Detroit's latest date with fate in Washington, the United Auto Workers have surrendered the union's version of corporate jets.
The union is suspending its most ridiculed perk, called the JOBS bank. That program, set up as part of a contract agreement reached between Detroit's Big Three and the union decades ago, pays auto workers 85% of their pay while furloughed. Some workers reported for years to meeting rooms where they would sit and wait for an assignment or be sent to clean public parks. All the while, they would get paid most of their wages.
The union also agreed to defer payments that the Big Three will make to a union-led health-care trust that is to take responsibility to pay medical benefits to auto workers starting in 2010.
The JOBS bank was costly in more ways than one for General Motors (GM), Ford (F), and Chrysler. By making labor a fixed cost, it altered their manufacturing strategy. For most of the past 10 years, the car companies preferred to discount models with big rebates rather than cut production, because they had to pay workers no matter what.
so long, entitlements
The provision also became an emblem of union abuse and what industry outsiders call Detroit's entitlement culture. "The JOBS bank became a sound bite that people used to beat us up," said UAW President Ron Gettelfinger. "It became a lightning rod."
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