With the automaker ready to pay for most of the cost, thumb the UAW negotiators managed to strike a significantly sweeter deal for health care coverage for around 11,000 General Motors employees that have been with the company after October 2007.
Instead, if the 52,700 workers ratify the proposed deal closed last weekend, they potentially have to pay more from their pockets – mainly if the largest US automaker will fall under the new tax, dubbed the “Cadillac Tax,” that looms in 2018. General Motors will not disclose its cost figures from the new four year contract until it gets ratified, but industry experts believe it to be steep – each worker will get an $8,000 signing bonus and hastened pay increases for Tier 2 hires, with many of them reaching the traditional veteran top wage in the upcoming four years. Besides the still unquantifiable health care coverage, the signing bonus alone will incur expenses of around $421 million. Additionally, there’s also the first pay from the $500 quality performance bonus that would be paid on November 15, adding another $26 million to the costs.
In return, the company will not have a cap on how many workers are hired at the low level grade because “in progression” the workers will have a clear way to the veteran rate. Seniority workers will reach the top base wage fast and new hires will need seven years. The veterans also get their first wage hikes – 3 percent in two of the contract’s years, along with lump sum bonuses in the other two – in more than a decade.