Pity the poor autoworker, being lumped in with investment bankers, corporate CEOs and public sector employees as symbols of what ails our economy.
With the Detroit-based carmakers on shaky ground, the wages and benefits paid to their workers have come under scrutiny like never before. The latest issue has Industry Minister Tony Clement weighing in on Italian manufacturer Fiat’s proposal to prop up Chrysler, backing up the company’s call for Chrysler workers to slash wages and benefit costs by $19 an hour, to $57.
As with the U.S. government, the Conservatives have tied further loans to Chrysler cutting its labour costs and reaching a deal with Fiat by the end of the month.
The magnitude of the cuts has the Canadian Auto Workers union talking tough. It has already agreed to a $7 an hour cut at General Motors, and proposes the same concessions at Chrysler. Now, with the government calling for deeper cuts at both ailing carmakers, union leaders appear to be digging in their heels.
The public reaction, not surprisingly, has been largely negative. Auto workers are seen as overpaid and underworked by many who already resent government money being poured into GM and Chrysler. The vitriol becomes even more pronounced when figures such as $76 an hour are bandied about – the proposed cuts represent more money per hour than many Canadians earn in total.
Much of the anger, however, stems from a misunderstanding of the wage figures used. The $76 an hour figure used represents the total cost as calculated by the employer: wages, benefits, CPP and EI deductions, pension funding and, very significantly, the cost of covering underfunded pension liabilities owed a long list of retirees. The average autoworker’s paycheque reflects nothing resembling $76 per hour.
Still, the total cost is significant, and is higher than that borne by the Detroit Three’s competitors. Bringing those costs – which represent perhaps eight to 10 per cent of the price of a car – in line with the others is the goal of the hard-line position adopted by the U.S. administration and echoed by Clement.
Union supporters argue the rhetoric scapegoats workers, countering that poor management and excessive corporate perks are really to blame for Detroit’s malaise. Their claim the financial crisis is being used to squeeze workers also has some merits, as history is replete with such examples.
That said, there’s no question both GM and Chrysler are in rough shape, the latter more so. There’s very real concern either or both could slip into bankruptcy protection – the U.S. Chapter 11 filing. The likelihood of that scenario forms the basis of a game of chicken between the manufacturers and the unions, who must decide if greatly reduced wages and benefits outweigh the risk of having nothing at all if a major restructuring comes.
For the rest of us, it’s best to look beyond the skewed positions to where we want to be when the recession – only the latest in a series, albeit more pronounced given the unethical actions of an unregulated financial industry – finally comes to an end. We’ve already seen the damage globalization has done, essentially creating a race to the bottom, where wages, benefits, living conditions and the environment have been sacrificed to the so-called bottom line.
Before taking a quick position on the auto industry woes, better to keep our eyes on a loftier goal than to have the terms dictated by the special interests who got us into this mess in the first place.
