Fiat Chrysler Automobiles seeks to get rid of two-tier wage system in the US

Article by Christian A., on May 26, 2014

Fiat Chrysler Automobiles is seeking to get rid of the two-tier wage system in the United States as its American unit is set to discuss its next labor agreement with the United Auto Workers in 2015. Under the system, newer workers get lower pays than older employees. New hourly workers receive just under $16 per hour, which increases over time to more than $19.

Veteran workers, meanwhile, earns over $28 an hour. Fiat Chrysler wants to gradually phase out the higher scale as older workers exit the carmaker, chief executive Sergio Marchionne remarked, adding that he targets to hold discussions with the UAW this year instead in 2015.

Marchionne has labeled the two-tier wage system as his "biggest problem.” Union officials have remarked that they hate and want to eliminate the two-tier wage system. Norwood Jewell, a nominee for vice president at UAW, said in December 2013 that the tow-tier current system was a "financial unfortunate" resulting from the industry weakness in 2007.

He noted that stronger economy of today should help the UAW’s case in the next round of negotiations. The Detroit 3 have quipped that the entry-level wage scale is needed to allow them to better compete on labor costs against Japanese, South Korean and German carmakers who have plants in the US.

Marchionne credited the union with increased flexibility over the last few years. He, however, said that he is hoping that the UAW would not call for a higher level of pay for all workers, since at the end of the day, workers share the pain with the company. [source: Reuters]

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