Chrysler-UAW labor pact solves all the big problems except one

By MoneyTimes

Sep 18, 2015 04:02 AM EDT

Fiat Chrysler Automobiles and the United Auto Workers union reached a new agreement regarding the company's health care and salary system including the 2-tier pay. The new term was discussed after some 40, 000 of the company's worker threaten to go for a strike that could potentially put the production on halt.

The new agreement is reached on Tuesday after the two sides have been in continuous 48 hours meeting. Although a detailed plan was not announced, according to the new agreement both sides agreed to three main points.

The points are Fiat agree to give more options for workers to work for higher pay, reward system for workers who have been there while Fiat is struggling, and also Fiat agreed to find solution for workers' health care.

However, all members of UAW still need to vote on the new agreement before it can be implemented.

Fiat has been under pressure after union workers have been complaining regarding the low wage received. According to ABC News, some of the workers have not had any salary increment even though they have been working for a decade. Another problem issued was the huge wage different between entry-level workers and the senior workers. The two tiers systems was implemented when Fiat was nearing bankruptcy in 2007. The problem not only create a problem with the workers as the cost of living is increasing but also reduce company's performance said the UAW President, Dennis Williams.

As for the health care, Fiat Chrysler CEO Sergio Marchionne suggested for both sides to set up a health care co-op pool instead of relying heavily on the union-run trust Business Insider reported. However, no further detailed regarding that has been shared with the media.

The Detroit News reported during 2011 talks, 58 percent of Fiat Chrysler's production worker agreed to deal obtained by UAW and only 44 percent of skilled trade workers agreed. However, the UAW had to use their veto power and continue with the deal after government intervention and bailout to ensure all automotive manufacturer will be able to keep production running in the US.

The talk regarding new agreement comes in place as UAW contracts with Fiat and other automotive companies expired on Monday. The new deal will be beneficial for some 140, 000 workers the union represents. While the new agreement was only reached on Tuesday evening, workers are paid based on the old contract in the meantime.

The new terms will be used as a model for other automotive manufacturers in the United States that the union represents.

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