GM To Offer Buyout, Early Retirement Packages To All 74,000 UAW Workers, Boosts Incentives

Main Category: Seniors / Aging
Also Included In: Health Insurance / Medical Insurance
Article Date: 14 Feb 2008 - 12:00 PDT

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General Motors on Tuesday announced another round of buyout and early retirement packages with increased incentives that aim to reduce its veteran work force to open positions for workers who would receive lower wages and benefits, the Washington Post reports (Schneider, Washington Post, 2/13).

Under a contract approved by GM and United Auto Workers last fall, the company will reduce labor costs through a two-tier wage and benefit system for noncore employees. Employees hired into the lower tier of the system will receive lower base pay and no defined-benefit pension plans or retiree health benefits. The contract also establishes a voluntary employees' beneficiary association managed by UAW that will reduce retiree health benefit liabilities for GM by about $47 billion (Kaiser Daily Health Policy Report, 1/18).

All of GM's unionized employees, about 74,000 workers, will receive some type of buyout or early retirement offer, according to the Detroit News (Terlep, Detroit News, 2/13). Although GM would not disclose the number of workers it hopes will accept the offers, UAW President Ron Gettelfinger said he thinks it will be less than 20,000 (Washington Post, 2/13). According to the Detroit Free Press, the 2007 labor contract paved the way for GM to hire 16,000 workers at the lower wage and benefit tier.

In addition to extending the packages to all unionized workers, the automaker also is boosting the benefits to more closely match offers made last month by Ford Motor. GM already made offers to about 5,200 workers this year, but under the new packages, retirement-eligible workers will receive greater lump-sum offers, as well as full pensions and benefits (Webster, Detroit Free Press, 2/12). Workers who are not eligible for retirement will receive buyout offers of up to $140,000, but they will relinquish their pensions and benefits under the deal.

GM will begin making the offers in the coming weeks. The automaker said that it will conclude the deals by July 1 and that it expects savings from the deals in the second half of the year (Detroit News, 2/13).

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