The U.S. auto industry appears ready to offer revolutionary changes next year in its labor contract with the United Auto Workers if the union will agree to abandon cost-of-living protection for its members.
Both Ford and General Motors are considering profit-sharing proposals for all union employes as part of 1982 contract bargaining. In addition, Ford sources say the company is working on a proposal to provide UAW members with some form of employment guarantee over the life of the new contract.
"Cost-of-living protection is a runaway," insists a top industry official. "It can't continue. There won't be a 40 percent settlement next year, and you can't avoid 40 percent with COLA [cost of living allowance]." As a result, he predicts the 1982 auto industry negotiations will be "innovative."
General Motors officials talk about offering the UAW members a profit-sharing plan similar to the one now offered salaried employees at the company in exchange for COLA relief. Under this system, salaried workers receive a pretax bonus based on a percentage of the company's income. But GM insists "everything's open" at next year's bargaining table. "We're starting with a clean sheet," says a company official.
Chrysler Chairman Lee Iaccoca summed up the industry's feelings about COLAs in a recent interview with The Washington Post: "I never felt bad about paying my guy $20 an hour. He was middle-class America. He did have kids. He did have two cars. The guy working at McDonald's for a minimum wage, he doesn't buy a new car. He doesn't sustain us.
"So there's nothing wrong with that [high wages]. It's just that going through this period [of high inflation] we can't afford the COLA escalator. It's that simple. The COLA is what's eating us up and adding to the costs. So if we get a modified COLA escalator until we get better, that's the key issue here."
So far, the UAW is skeptical about industry talk of profit-sharing and employment guarantees. But both ideas appear to be high on the union's 1982 bargaining agenda. For the moment, however the union insists it will not consider either proposal as a substitute for a COLA. "We don't envision it as a tradeoff; we envision it as an add-on," a UAW official said.
Despite the union's insistence that it will not abandon COLAs, there already are strong indications that it is prepared to consider major changes in next year's contract negotiations -- changes that could have a major impact on labor relations throughout the economy.
Last month the UAW's Ford and GM bargaining councils rejected requests from the two companies to reopen their contracts to reflect concessions the union was forced to give Chrysler as a condition for the automaker to receive federal loan guarantees. In rejecting the request for a reopener, however, the UAW agreed to set up special study committees to explore the major issues in next year's negotiations -- a strong signal the union was ready to consider major contract change.
"Historically, whenever there's been a major breakthrough in bargaining, we've set up a study committee," admits a UAW official. In the past, "These committees have not done any actual bargaining, but they have been used to clarify positions and define costs so that when the crunch comes [in eventual negotiations], we're not arguing over facts," the official notes.
At this point, the study committees are still in the discussion stage, according to both industry and union officials. Creation of the actual committees still may be several months away.