UAW assumes retiree-benefits burden for GM workers

U.S. deal could cost Canada its competitive advantage
||Last Updated: 09/28/2007

After a two-day strike by United Auto Workers members at General Motors in the United States, the union and the company reached a deal to shift the burden of retiree health-care benefits to the union.

The deal will relieve GM of its $51-billion US obligation for retiree health-care benefits. Instead, the company will make a one-time, $36-billion US investment into a Voluntary Employees Beneficiary Association (VEBA) trust, which the union will manage.

This is expected to save the company $18 US to $19 US an hour in labour costs, with the average hourly U.S. labour costs falling to $55 US (includes pay and benefits), close to the estimated $48 US that Japan-based auto makers pay their U.S. workers.