Marchionne: Two-Tier Wage System Unsustainable for Chrysler

Chrysler CEO Sergio Marchionne is unhappy with certain parts of the new labor agreement reached between his company’s workers and the United Auto Workers union. According to Automotive News, Marchionne told reporters that a two-tier wage plan is not viable and must be ended when the Chrysler-UAW labor deal is renegotiated in 2015.

The two-tier system originated in 2007 so that Detroit’s Big Three automakers (Chrysler, Ford, and General Motors) could pay entry-level workers lower wages of about $14 per hour. The idea was to trim costs and keep the Detroit manufacturers competitive with their European and Asian competitors.

“We need to have one set of wage rates which clearly recognize the participation of our people in the profit generation of our people in the house,” Marchionne told Automotive News.

Under the new Chrysler-UAW agreement, wages for new hires will climb to a maximum of $19.28 per hour. Tier workers reportedly account for about 13 percent of Chrysler’s assembly workers.

UAW President Bob King also has said he wants to abolish the two-tier wage system. “It's long been a value of the UAW that people doing the same job should make the same rate of pay,” he said in an interview with PBS. At the same time, King says the UAW established the two-wage setup in order to “save” the Detroit automakers.

Marchionne and King reportedly worked together to eliminate the two-tier system during this round of contract talks, but couldn’t reach an agreement. The two plan to approach the idea again when a new labor contract is negotiated in 2015.

Source: Automotive News

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