Global Insight Perspective | |
Significance | Created in the early 1980s in response to worker concern about working to improve efficiency and the lost jobs that might entail, the jobs bank was created to assuage workers' concerns that they would optimise themselves out of a job. |
Implications | Over the last 20 years, the jobs bank has swelled and shrunk, but has cost the automakers billions of dollars that they currently can ill afford to part with. It has become the likely target for negotiation in contact talks that begin this month, but the UAW has said that it will fight to keep what it views as a hard-won benefit. |
Outlook | A deal reached between GM and the UAW last year provided that automaker with a way to start closing the jobs bank; it may become the framework for eliminating the jobs bank among all of the U.S. automakers. |
It is a benefit that the United Auto Workers (UAW) union fought hard to attain, and now it is likely the most controversial feature of union worker compensation and a prime target for this summer's union contract talks. UAW workers who have been laid off go onto the jobs bank list, wherein they are still paid their salary and receive benefits, and theoretically are still ready for call-up when the Big Three automakers need additional personnel. But the jobs bank has been viewed as a lead weight around the neck of the automakers, who have reportedly spent billions of dollars on the fund that is increasingly viewed as an outdated feature of the unions' attitude of entitlement. For that reason, the automakers are expected to insist on the elimination of the jobs bank in the third-quarter negotiations with the UAW, but the union is not likely to let it go easily. Roughly 4,200 workers are on the list, a significantly smaller number than just a year ago, before the massive buyouts at General Motors (GM) and Ford reduced the number from roughly 12,000 personnel, but still a sizeable level.
"We want to save the American auto industry," said Terry Everman, a UAW official with Flint (Michigan) Local 599. "We know what kind of trouble we face, but to give up the jobs bank is to give up everything the union fought decades to win," he said to the Detroit News. "None of these workers wanted to stay in the bank for this long. But they stayed because GM made them a promise that if we cooperated, which we have all along, if we worked hard and produced quality, which we have, then we would keep our jobs. How do you save the American auto industry by sacrificing the rights and protection of workers?"
The jobs bank was created in the early 1980s in response to the union's fears that workers would lose their jobs if they proposed efficiency recommendations on the line, a practice common at that Japanese manufacturers that the Big Three were trying to catch up with. The Big Three automakers created the jobs bank to help assure workers that they would not recommend themselves out of a job should they submit process improvements to the line, with each of the automakers committing hundreds of millions, if not billions of dollars to the fund. But now, with the labour cost situation in the United States reaching critical for the American automakers, the jobs bank is viewed by many as a benefit that is simply not economically sustainable.
The UAW has shown some signs that it understands this situation, and agreed to a landmark deal earlier in the year with GM that may be the framework for how the jobs bank gets closed for good later on. GM won the right to eliminate the jobs bank for skilled trades workers in two of its Michigan locations, offering those still on the list early retirement buyout or retraining in another skilled trade, relocation to another plant, or a job in an unskilled production role. The move is expected to eliminate nearly 100 workers from GM's jobs bank in Flint (Michigan) alone. Whether or not this becomes the framework for eliminating the jobs bank in a wider capacity across carmakers remains to be seen.
Outlook and Implications
This is one of the most contentious topics facing the UAW contract talks scheduled to begin later this month. The jobs bank is viewed as one of the basic entitlements simply due to the length of time it has been around; for over 20 years, workers have relied on it as well as local communities and charities, who have apparently been putting the idle workers to use in all manner of community service projects. But the cost of such a benefit is simply unsustainable in the current global economic reality. The indignant cries of "we fought for it, we earned it" are simply irrelevant when the health of the company in question and its ability to manufacture profitably in its home country are in dire jeopardy. The jobs bank was a decent idea at the time when the full scope of the competitive manufacturing advantage that the Japanese manufacturers had was not yet so glaring; in the current global manufacturing environment, however, it is a relic of a past age that no longer holds relevance when corporate survival is at stake. The glory days of the American auto industry are likely not going to return in a form anywhere near the levels previously enjoyed by the Big Three, and the attempts to shift away from the old way of doing business need to be continued lest the fight for entitlements ruin what chances the automakers have of recovery.
Thankfully, a pragmatic spirit of cooperation and joint effort seems to be prevailing at the UAW. President Ron Gettelfinger has marched out significant levels of rhetoric, but the management and even the rank and file have shown willingness to compromise on structural changes that they know will help improve the business situations of their employers. For while the UAW members may be quite vocal about protecting hard-won benefits, the writing on the wall is very clear that in a global economy where production can be relocated fairly easily to lower cost locales, that compromise is an absolute must.