Friday, December 5, 2008

Getting paid without leaving home

5 Dec 2008

NEW YORK - FOR more than two decades, many auto workers who lose their jobs have been able to enjoy one of the best unemployment benefits in the nation: receiving nearly full paychecks without even leaving home.

Since the 1980s, the industry's 'jobs bank' has allowed thousands of laid-off workers to get paid for staying home or sitting in a union hall.

The practice began as a way to entice the United Auto Workers to accept robots on the assembly line.

Now it appears headed for the scrap heap as the union takes drastic steps to help automakers get a financial lifeline from Congress.

'I don't think they conceived of themselves as ever having to worry about this,' said Professor Gary Chaison, professor of industrial relations at Clark University.

'I think their view was that they could still produce sufficient capacity in the United States to satisfy the market need.'

In Washington, desperate automakers seeking a US$34 billion (S$52 billion) bailout renewed their pleas to lawmakers on Thursday, a day after the UAW offered concessions that included ending the jobs bank programme, which has become a much-maligned symbol of Detroit's largesse.

The programme started in 1984 as something both the United Auto Workers (UAW) and their employers supported to promote factory automation and innovation, according to labour and industry experts.

'It raises morale,' said Professor Harley Shaiken, a professor at the University of California at Berkeley who specialises in labour issues.

'You avoid losing experienced workers, and you ensure that workers have an incentive to improve productivity.'

The bank continues to compensate about 3,500 laid-off union employees with the hope that they can eventually be rehired.

The original intent was to allow factories to be modernised with robots and other improvements, so Detroit could better compete with overseas manufacturers without jeopardising employees' job security.

In the past, employees could stay in the program indefinitely. At its peak, as many as 7,000 to 8,000 workers at General Motors were in the jobs bank.

That figure is now down around 1,400, according to the UAW. After a new contract was approved last year, some strict limitations were put in place.

The terms and conditions vary by automaker, because each labor contract is different. But GM factory workers who get laid off start out at 'sub pay,' in which they receive unemployment benefits, and GM pays the difference, up to most of their salary, for 48 weeks.

After that, laid-off employees go into the jobs bank, where they have the option of taking 85 per cent of their base pay - which averages almost US$62,000 a year - plus benefits, without reporting to work. In the meantime, the company tries to find them jobs elsewhere.

Or workers can get 100 per cent of their pay by reporting to either the union hall or the plant, where they may be called upon to perform tasks around the factory or sometimes community service work.

But if there isn't anything to do, workers simply stay at the union hall or factory and find ways to pass the time.

Employees can sometimes turn down as many as three jobs at other company factories before they are kicked out with no more pay or benefits. The number of offers a worker can decline varies by company and by how far away the new job is. In some cases, it's none.

The irony is that the program was conceived as a way to improve productivity and morale among employees while automakers were trying to improve their factories.

'This was initiated at a period when GM in particular, but the whole domestic industry was investing heavily in new technology,' Prof Shaiken said.

'They wanted the union's support in bringing robots in and other automation. How do you do that? You say, 'Look, you're not going to get displaced. You're going to get reassigned.''

UAW President Ron Gettelfinger said Wednesday the union was willing to suspend the jobs bank in exchange for the US$34 billion in loans the Detroit Three are seeking.

But auto experts agree that the programme's cost is probably only a drop in the bucket for automakers, and its elimination is largely cosmetic.

'It's the union's private jet,' Prof Chaison said, referring to the harsh criticism endured by auto executives last month when they took corporate planes from Detroit to Washington to lobby for government loans.

'I don't think it's tremendously costly,' he added. 'It's certainly not as costly as the health care benefits or something like that. I think the union was in a position where they had to end it.'

But the image of thousands of auto workers getting paid to sit idly while their industry seeks a bailout from taxpayers risks a backlash.

'It's gotten incredible negative publicity,' Prof Chaison said.

'In bad times, it makes auto workers sound like they're living an extravagant life. It makes it sound like these are fat cat auto workers.'

To be fair, Toyota Motor also has paid workers whose plants were temporarily closed because of low demand. During the shutdown, employees were given additional training.

'In effect, Toyota doesn't have a jobs bank because the company culture is one giant jobs bank,' Prof Shaiken said.

'I'm sure there's a lot of people they could lay off tomorrow - given how poor the sales are - that they are training or retooling or doing something that is the absolute equivalent of the jobs bank.' -- AP

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