Auto worker contracts signed last fall will cost the car companies about four times as much in wages and fringes as first reported and could set a pattern for inflationary labor settlements late this year, according to an unpolished report by the Council on Wage and Price Stability.
Furthermore, the report contends, the United Auto Workers' attempt to force companies to hire more workers by increasing days off could backfire and reduce "job opportunities for auto workers."
The draft report, completed last week, is being circulated to the council's administration members, the auto companies and the UAW for comment.
The Washington Post obtained a copy of the document and and a cover memorandum to the members of the wage-price council written by acting director William Lilley III.
The study analyzes the three-year contracts signed by the UAW with Ford Motor Co., General Motors Corp.
Lilley confirmed that the had written the document and that it had been "circulated routinely" to the union the companies and members of the council for comment by 10 a.m. Monday.
Lilley did not say whether the concil report, which says the settlement is substantially more inflationary than it seems on the surface, would be released before President-elect Jimmy Carter's inauguration. He said draft documents, "often go through many changes."
A similar study critical of the Teamsters union's settlement last spring was held up for months and substantially toned down mainly because of pressure from Labor Secretary W. J. Usery Jr. The council had similar difficulty analyzing for public consumption wage pacts in the electrical and rubber industries.
Wage settlements in the auto cover about 725,000 workers - nearly all of them at GM, Ford and Chrysler - and set the pattern for 95,000 other workers in the agricultural equipment industry.
The wage-price council staff study said that while wage increases under the contracts signed with the Big Three automakers totaled only 89 cents an hour over the three years, total compensation - including wages, a 6 per cent annual cost-of-living increase and benefits - will rise $3.74 an hour.
The wage increases are slightly more moderate than those in the trucking, electrical and rubber industries. But Lilley, in his cover letter, says that unlike workers in those industries, auto workers went to the bargaining table last year fully covered by cost-of-living provisions in the 1973 agreement.
Other fringe benefits - including increased payments into a special fund that supplements unemployment benefits for laid-off auto workers and sharply rising health care premiums - "boost total labor costs significantly and could prove a harbinger for future major settlements," Lilley wrote.
By itself, the settlement can be expected to raise the cost of producing a car by about $100 each year. Labour accounts for one third of the cost of producing a car and the study says that other costs such as materials "will also be rising."
In an attempt to force auto companies to hire more workers - more than 200,000 auto workers were laid off at the height of the 1974-75 recession, and job security is one of the highest UAW priorities - the union negotiated more paid days off.
"The need to keep assembly lines running while scheduling these days [off] wil presumably cause the companies to hire additional workers," the study said. Auto workers, who now have 33 paid days off a year, will have 40 by the end of the four-day work week.
The study said this move, coupled with improved funding of the supplemental unemployment benefits, can "be seen as a significant movement toward trying to guarantee workers a certain annual income for fewer hours worked" that could affect other industries.
But these moves sharply boost labor costs to the automakers that could encourage imports of cheaper foreign cars whose makers have lower labor costs.
"In the long run," Lilley wrote, domestic automakers will lose some of their share of the market, leading to "fewer jobs for U.S. auto workers," At the same time, the domestic industry would be encouraged to boost investment in labor-saving equipment that also would reduce the number of jobs.
"In short," Lilley continued, "the council fears a double backfire on both prices and employment" because of increased days off in the UAW contracts.