DETROIT, Sept. 16 (UPI) -- Fiat Chrysler Automobiles NV and the United Auto Workers announced a tentative labor agreement, which includes a step toward removing the two-tier wage system.
Although neither side elaborated on the agreement late Tuesday, UAW President Dennis Williams referred to the proposed contract as "balanced" and it keeps both the union and the corporation competitive. The current contract expired Tuesday, but was extended as talks continued.
The new deal between FCA and the UAW will eventually remove an arrangement by which newer employees in factories, those hired after 2007, earn about nine dollars per hour less than more experienced workers, a point of contention on the shop floor. The agreed-to structure will phase out the pay difference, said people familiar with the agreement, with the lower wage becoming the standard as older workers retire.
Fiat Chrysler chief Sergio Marchionne said negotiators "crafted a very careful process by which the [two-tier] system will go away."
Another factor in the agreement involved workers' healthcare expenses, which currently cost Detroit auto manufacturers $2 billion per year.
"Healthcare was an important piece of this contract. I think we have an obligation to manage a better way. There are built-in inefficiencies of how health care is run today," Marchionne said.
The union has sought a healthcare purchasing pool, involving more than 1 million workers and retirees, whose size could bring lower prices from healthcare providers.
The agreement was expected to be put before unionized Fiat Chrysler employees for a vote, while negotiations continue between the union and the more profitable General Motors Corp. and Ford Motor Co.
Though the first agreed-upon contract typically sets a pattern for negotiations with the remaining manufacturers, Williams said, "The FCA contract doesn't have to be an identical pattern. I don't want people to think for one minute that I am not looking at the other companies and what they have made. Each company has unique operations. What we have here for FCA doesn't mean we will have the same thing for GM and Ford."