'It’s brutal, dishonest, economically asinine and painful to observe.... Union wages account for about 7% of the cost of a car.' - Larry Brown.
By Larry Brown
National Union of Public and General Employees (NUPGE)
Ottawa (24 April 2009) - The assault on Canada’s autoworkers – with the enthusiastic participation of the federal government – marks a very low point in this country’s labour history. It’s brutal, dishonest, economically asinine and painful to observe.
One would think the biggest problem facing our economy is the fact that the CAW has, over the years, fought for a decent standard of living for the workers who make cars for the Detroit big three.
Well, union bashing is union bashing, even if it operates under the guise of a response to an economic crisis. When you have a federal government minister joining with company heads to bash unions, it is pretty darn distasteful and completely unacceptable.
The problems in the auto sector come from mismanagement of the companies, from trade deals that gave an unfair advantage to imports and from a financial crisis started by banks on Wall Street. For all those reasons the companies need government help. None of this excuses the dishonesty and the opportunism of the attack on unionized workers.
Contracts should mean something
The head of Fiat, the company that wants to merge with Chrysler, has said that Chrysler workers have to “end their sense of entitlement.” That seems to mean that these union members have to end the sense that they are entitled to the wages and benefits they’ve bargained for – and signed a collective agreement for. How dare they think they have the right to what they’ve signed a contract for!
So a potential new boss wants to drive the wages and benefits of his potential employees down before he takes over the company. Just exactly how surprising is that? To elevate that kind of management tactic to the level of government policy is absurd.
Why are 20 countries providing financial support to their auto industries – and only two of those 20 making a condition of that support that the workers in the industry take massive cuts in wages and benefits? The two exceptions are the U.S. and Canada. And no, it’s not because autoworkers here earn more. Canada has lower employee costs than Germany or Japan, for example.
Experts on the auto industry, and rational observers, are united in one assessment – the problem with the big three is not employee wages, it’s lack of sales. Cutting wages and benefits won’t do a thing to improve sales. Instead it will drive the economy further into the tank and result in fewer car sales.
Wages are just 7% of the cost of a car
Union wages account for about 7% of the cost of a car. If union wages were cut in half, that would mean a cut of 3.5% in the total cost of the car. Will that trigger a flood of new car sales? It hasn’t ever happened in the past, so why would it now?
Experts have calculated that if CAW members worked free for a year the companies would be able to last an extra 11 days – that’s the extent of the cost relief from no wages at all.
For the overall economy, major cuts in the wages and benefits of autoworkers will drive this limp and flagging economy even further into the ditch. Canada desperately needs purchasing power in the hands of consumers, desperately needs the economy to reinflate. Cutting the wages of a significant part of the workforce is exactly the opposite of what is needed now.
The economy got into trouble because of rampant greed at the top, deregulation that allowed that greed to go unchecked, growing inequality between the rich and the rest of us and trade deals that cost us our ability to protect ourselves. Workers’ wages are nowhere on the list of economic problems, except insofar as they are too low. And that’s contributing to the flattened economy.
Bad management caused the problems
The auto industry got itself into problems in large part because of bad management decisions that for a time led to poor quality, because executives committed themselves to gas guzzlers when the rest of the world saw the strain on oil prices that was going to make gas guzzlers obsolete and because profits made here were diverted elsewhere.
Canada’s auto industry is in trouble now because the economy is in trouble and people aren’t buying cars right now.
No amount of union bashing by the federal government will change any of these facts.
Finally, let it be said one more time: the double standard at work here is breathtaking.
When has any federal minister called for a clawback of the outrageous salaries and benefits of CEOs – in the banks and in the auto companies? Before the banks could get federal money they had to promise nothing; before auto companies get federal money they have to promise to beat up their workers. Neither had to touch their CEO salaries.
Greed and irresponsibility
GM workers have given up $1 billion in benefit costs, and they are being asked for more. They are told that the pensions they worked for all their lives won’t be secure. Meanwhile, the CEO of GM, the executive who drove the company over the cliff, walks away with an estimated $23 million in pensions and benefits.
The greed and irresponsibility, the sense of entitlement of those at the top, the insistence that executives and not workers should pocket all the benefits, all of those things that led us to the hole we’re now in, are all on full display in the attack on autoworkers.
It’s a pretty pathetic display.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE