Auto bosses, UAW press ahead with “pay-for-performance” scheme

By Jerry White
4 February 2011

The top management of Detroit’s carmakers and the United Auto Workers union are pressing ahead with their campaign to introduce a “pay-for-performance” scheme in the new labor agreement being negotiated this year for 120,000 workers at General Motors (GM), Ford and Chrysler.

Last month, GM CEO Daniel Akerson announced his support for an “incentive-enhanced variable pay system for employees” that would be tied to productivity, quality improvements and corporate profits.

Akerson, a former Carlyle Group hedge fund manager slotted into top management by the White House Auto Task Force, has stressed wages should not add to the company’s fixed costs. Workers should receive “performance” bonuses only if the company profits.

The UAW has already indicated a willingness to consider the idea, which it has palmed off as workers getting a “piece of the profits” after giving up tens of thousands in wage and benefit concessions.

The implementation of the proposal, however, would mean a return to conditions not seen since the 1920s, when auto workers were paid according to output and wages fell precipitously if production slowed because of falling demand. One of the most basic principles fought for by the UAW during the mass struggles that established the union in the 1930s was the abolition of the hated piecework system and its replacement with standardized hourly wages, protected by a union contract.

Akerson’s plan has been hailed by corporate and media spokesmen as “revolutionary,” with the Washington Post suggesting it should be adopted in other industries to meet President Barack Obama’s push to make US corporations more competitive.

In an editorial published Tuesday, the Post comments, “Casting a newcomer’s skeptical eye over the traditional model of labor relations, GM’s chief executive, Dan Akerson, has proposed changing the way autoworkers get paid. Instead of simply negotiating another three-year contract calling for annual wage levels that workers would get regardless of how well the companies are doing financially or of the quality of the vehicles they produce, Mr. Akerson suggested that management and the union agree to link pay to performance in this year’s talks. Options include offering workers company stock or paying them based on auto quality ratings.”

The Post insists the auto companies—which have just announced billions in 2010 profits—are “too fragile to afford substantial pay hikes now” and warns workers the companies can “move jobs abroad if U.S. labor costs rise too high.”

The editorial concludes by urging UAW President Bob King to make good on his promise of a “dramatic and radical change” in union policy by accepting the proposal.

The Post has nothing to worry about on that score. The UAW is actively seeking to implement the plan, which is the logical outcome of its decades of suppressing rank and file resistance to speedup and brutal cost-cutting. Soon after taking office last year, King declared that the 21st century UAW had jettisoned the “us versus them mentality” of the “old UAW” and was entirely committed to the success of the automakers.

According to a report in the Detroit Free Press on Tuesday, “Automakers, who must negotiate a new labor contract with the UAW this year, are giving higher-than-required annual payments to autoworkers as part of a strategy to convince the rank and file to keep labor costs flat in return for bigger profit sharing in the future, experts told the Free Press.”

On Monday, Chrysler said it would pay an average $750 “performance award” to its 22,000 UAW workers and 7,600 Canadian Auto Workers members, although it lost $652 million after paying interest on its government loans and other restructuring expenses.

Last week, Ford announced plans to hand out a $5,000 profit sharing check per worker after reporting a $6.6 billion profit for 2010. GM is expected to announce that it will give each worker a $1,775 check later this month, the largest amount since profit sharing began in the 1980s.

The UAW is going along entirely with this ruse, presenting the inflated profit-sharing as an expression of the companies’ commitment to auto workers. After Ford’s announcement, King gushed, “What’s really important for our members to know is they didn’t have to do this. They did much more than they technically would have had to do under our agreement.”

UAW vice president for Chrysler, General Holiefield, praised the company’s decision, saying, “This certainly shows the character of the new Chrysler to give recognition to the UAW Chrysler workforce.”

The amounts are a pittance compared to the loss in wages and benefits suffered by workers, which averages between $7,000 and $30,000 per worker since 2007. In addition to sanctioning plant closings and downsizing that have wiped out the jobs of at least 50,000 workers at the Detroit Three companies, the UAW agreed to the halving of wages for newly hired workers, down to $14 an hour, which has allowed the automakers to reduce costs to the level of its non-union competitors in the Japanese and European-owned factories operating in the southern US states.

The UAW and the auto companies are reportedly modeling their plans on so-called “Gainsharing,” first promoted by a section of the United Steelworkers’ union bureaucracy in 1937. According to Wessels Sherman, a pro-corporate law firm, gainsharing causes employees to “view restrictive work rules as a drawback to their ability to earn bonuses” in unionized companies.

The Wessels Sherman web site continues, “Employee performance is quantified and given a dollar value in Gainsharing. When employee performance improves over a threshold level pre-set by management, the company retains half the value of that improvement. Employees receive the other half. So for every dollar paid to workers, the company saves a like amount in better productivity (fewer employees, less overtime at premium rates), better quality (fewer internal defects or customer returns), and improved safety (lower workman’s comp premiums). The bonuses employees earn are typically paid monthly, and have to be re-earned each and every Gainsharing period. This eliminates any sense of employee entitlement.”

Such a regime in workplaces is the capitalist’s dream come true. Workers would race—with the UAW increasing the speed of the assembly line—to produce as much as possible as quickly as possible, thereby maximizing the profits pumped out of the working class and into the pockets of the corporate executives and Wall Street investors.

That the UAW is preparing to impose such conditions only underscores that it is no longer an organization of the working class, but a co-partner in exploitation. Auto workers can only begin to defend themselves by breaking with this rotten apparatus and building new organizations of struggle—elected by rank and file workers—to mobilize against the auto companies, their UAW servants, the two corporate-backed political parties and the capitalist system they all defend.

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