In a major concession required by terms of the auto industry's federal bailout, General Motors Corp. will end its controversial "jobs bank" program that gives some idled workers full pay and benefits even though they're not making cars.
The jobs bank ends on Monday.
On Wednesday, GM said that the United Auto Workers union had agreed to allow the company to end the program, which means that about 1,600 workers now in it will have to apply for unemployment benefits.
But even so, they still will receive about 72 percent of their normal take-home pay, because GM will give them so-called "sub pay" to supplement the money they receive from their states' unemployment insurance programs, the automaker said.
There is still a lingering question whether just wiping out the jobs bank will satisfy provisions of the federal bailout, under which Chrysler LLC and GM are to receive a total of $17.4 billion in federal loans to help them through their financial crises.
The terms of the government aid require the automakers to stop "the payment of any compensation or benefits to U.S. employees of the company or any subsidiary" if those workers have been fired, laid off, furloughed or idled, other than giving them "customary severance pay."
Chrysler has already ended its jobs bank program.
Mike Herron, chairman of UAW Local 1853 at the GM plant in Spring Hill, said that GM and the union see the so-called "sub-pay agreement" as part of customary severance pay.
U.S. Sen. Bob Corker, R-Tenn., who pressed the automakers for pay concessions as a condition of receiving the federal loans, said that GM's Wednesday announcement was "old news."
"The UAW agreed to do away with the jobs bank in early December," he said. "But there are, however, still a number of outstanding issues, and I look forward to seeing what progress has been made when the auto companies submit their plans next month."
GM and Chrysler must give the government their comprehensive revitalization plans in February, and if those plans are not deemed acceptable, they might have to begin repaying the loans by the end of March.
Chrysler has received $4 billion, and GM has been given $13.4 billion.
Auto industry analyst Erich Merkle said the elimination of the jobs banks "is largely political posturing. This by no means will return GM to viability. There are many issues the company has to work through to ensure its future."
Negative connotationBut he added, "The whole jobs bank idea has a negative connotation, especially to those outside the auto industry who don't have such benefits."
Herron said no workers at the Spring Hill plant are in the jobs bank program at this time, and that while the plant was shut down for 14 months from spring 2007 to summer 2008 for retooling, the workers were officially on layoff and receiving state unemployment benefits and GM sub pay.
State unemployment benefits usually are available for up to 26 weeks, unless they are temporarily extended by the federal government, as they have been at least twice in the past few months as the recession has deepened.
On a national level, workers participating in the GM jobs banks had been expected to report to either their plant or union halls and undergo training or perform community service in return for receiving their pay. Many, though, have said they spent their days sitting in conference rooms, playing cards or watching TV.
The theory was that sales would grow, allowing the manufacturers to bring many of the idled employees back to work. The companies saw the jobs banks as a way to keep trained, experienced workers available for callback, rather than losing them permanently to other manufacturers.
The notion that jobs banks were exclusive to the U.S. automakers was a false concept, Merkle said.
Toyota, for instance, suspended production at its Tundra pickup plant in San Antonio, Texas, for the last three months of 2008 because of bloated inventories, but employees still reported to work each day and were given additional training or other tasks not related to the assembly of vehicles.
"The problems the auto industry is facing right now are not limited to the U.S. manufacturers," Merkle said. "It's a global problem because of the economy, and every company is hurting."
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