The United Auto Works has called off its strike and 73,000 workers will return to work at General Motors Corporation as the two sides announced a tentative 4-year labor agreement this morning -- subject to approval by the union's membership.
A central piece of the compact between GM and the UAW is a "voluntary employees' beneficiary association" -- or VEBA -- a trust established for retiree health care benefits. The trust will be managed by the UAW, not GM, and could grow as large as $50 billion.
Speaking just hours after the tentative agreement was signed this morning, UAW President Ron Gettelfinger said retirees are
going to be secure in their retiree benefits... [and] will be especially pleased with this agreement because there's other things in the package for them.
The contract is considered a landmark in labor negotiations. In a statement today, GM said the Securities and Exchange Commission (SEC) would conduct a review of its accounting treatment for the VEBA fund.
Wall Street analysts have said establishing a VEBA could cut GM's annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.
The fact that health care has taken center stage over job security in this round of bargaining is a sign of the times, as employers struggle to remain globally competitive. For an astute analysis of the UAW-GM deal and what it implies for proposed health care reform legislation in California and elsewhere, check out Robert Laszewski's piece on the Health Care Policy and Marketplace Review Blog.
SOURCE: "UPDATE: UAW Chief: GM Health-Care Trust To 'Secure' Benefits," Dow Jones Newswire, September 26, 2007
SOURCE: "UAW, GM Settle Strike with New Health Care Deal," Reuters, September 26, 2007
photo courtesy of jm3's photostream on Flickr remixed under this Creative Commons license.
thanks for the photo credit.
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