Compensation by Newman, Gerhart, & Milkovich...\"Two-Tier Wages\" Chapter 7 How

Question

Compensation by Newman, Gerhart, & Milkovich..."Two-Tier Wages" Chapter 7

How do you think the UAW and the workers it represent will react to Mr. Marchionne’s plan? Consider the global competitive market forces we have identified and consider also the degree to which worker interest in keeping and creating jobs and achieving higher wages (and/or total compensation) are in line with Fiat Chrysler’s interest in your answer; then explain how large profit-sharing payments for workers been at Fiat Chrysler and Ford and GM in recent years? And, why the companies would want to raise pay levels using these sorts of payments rather than via increases to base wages; How the UAW and workers would likely react? Explain.

Explanation / Answer

First let me explain what two tier wages are

A worker hired after certain date is paid lower wages than the older piers, This was major concession granted to chrystler by UAW during the height of recession. But later on UAW demanded that the policy must be abandoned and equal wages must be paid to tier 2 workers after they cross 7 years of service.

Further UAW also has profit sharing aggrement with big 3 automobiles of us each automaker pays average of $10,000 per worker. This is much better mechanism than increasing wage of workers.

Workers want these big 3 companies to survive, They will work harder to earn profits for the company. This will make sure that company is profitable and they recieve share of companies profits. This is much more acceptable.

Furthersome companies wont be burdened out to extinction. If there is no profit earned they wont recieve any bonus this is much more responsible and helps companies and workers.

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