'Significant sacrifices' in tentative deal with GM: union

Canadian Auto Workers union president Ken Lewenza announces the tentative deal at a news conference in Toronto on Sunday.(Frank Gunn/Canadian Press)Both current and retired General Motors workers will "feel the pain" of changes negotiated Sunday in a tentative contract agreement with the struggling automaker, the Canadian Auto Workers said.

CAW president Ken Lewenza said the union had to agree to "significant sacrifices" to ensure the federal government would grant GM financial assistance.

"The federal government demanded contract cuts as a condition for providing aid to the industry. If government doesn't provide emergency assistance, the company will surely fail," he said.

Lewenza said the base wages and current pension levels of workers will be protected under the tentative deal — which will be voted on by 10,000 workers in Ontario on Tuesday and Wednesday — but he added there will be "many other sacrifices."

Union negotiators agreed in the tentative deal to freeze both wages and pensions, cut paid vacation time, and make current workers and pensioners pay more for health and insurance benefits.

However, all of this will only happen if the federal and provincial governments come through with billions of dollars in help for GM, Lewenza said.

General Motors Canada issued a statement Sunday complimenting the union for sharing sacrifices in tough economic times and calling the tentative deal a positive step in its restructuring plan.

Some of the features of the contract include:

The existing CAW-GM contract, which was signed last year, is extended one additional year, to expire in September 2012.Base wages are frozen for the remainder of the contract.Quarterly cost-of-living adjustments for wages are suspended until almost the end of the contract, coming back into effect in June 2012.There will be no annual cost-of-living adjustments to pensions in this contract.Paid time off is reduced by an additional 40 hours per year, on top of the 40 hour reduction in annual vacation pay already implemented, beginning in 2009.An annual $1,700 special bonus payment is diverted to help offset the cost of retiree health-care benefits.There will be a new monthly co-pay premium for health care benefits, which will collect $30 per month from active workers and pensioners under 65, and $15 per month from pensioners over 65 and surviving spouses.

Lewenza said CAW members and their families "will feel the pain" of this contract, but he said the changes were necessary to maintain Canadian competitiveness in the industry.

He said hourly costs for CAW members will remain "significantly lower" than in the U.S. plants.

"Given the restructuring in the U.S. industry, including changes in the UAW contract, we had to keep pace to preserve our Canadian investment advantage, to make sure there were no reasons to move work from our plants to the United States."

Last month, General Motors outlined a restructuring plan that would cut its Canadian workforce to 7,000 and seek as much as $7 billion from the federal and Ontario governments.

With files from the Canadian Press