United Auto Workers members ratified a new four-year collective bargaining agreement with General Motors that includes establishing an independent trust fund to pay retiree health benefits. Meanwhile, Chrysler reached a tentative agreement with the UAW to set up such a trust.
In a vote of 66% in favor among production workers and 64% in favor among skilled-trade workers, UAW members solidified a tentative deal made on Sept. 26 with GM after a two-day strike. The new GM contract covers more than 73,000 active workers at GM and more than 269,000 retirees and 69,000 surviving spouses, and resulted in no job cuts.
Under the terms, GM will contribute more than $35 billion toward health benefits, including a $24.1 billion contribution to set up a Voluntary Employee Beneficiary Association, or VEBA, a tax-exempt trust to pay for retiree health benefits that allows the automaker to take retiree health liability off its books.
GM will contribute $1.6 billion in annual contributions if needed to maintain the solvency of the VEBA and issue a $4.37 billion convertible note. The automaker will make about $5.4 billion in direct payments for retiree healthcare through Jan. 1, 2010, before the new VEBA becomes operational.
Active GM workers will contribute to the cost of their own and retiree healthcare through cost-of-living adjustment diversions, according to the UAW.
The agreement also creates a National Institute for Health Care Reform, a joint labor-management research and educational center on affordability, access and accountability in healthcare, funded with $15 million from GM in five annual payments.
The UAW called off a strike Wednesday after nearly seven hours when it reached a tentative agreement with Chrysler on a new labor contract covering about 45,000 workers. While the details were not immediately available, the deal includes a memorandum of understanding to set up an independent retiree healthcare trust, Tom LaSorda, Chryslers vice chairman and president, said in a prepared statement. -- by Rebecca Vesely
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