Canadian Labour Reporter

7 Canadian HR Reporter, a Thomson Reuters business 2014 CANADIAN LABOUR REPORTER 6. Touching on the issue of the 2015 contract ne- gotiations with the United Automobile Work- ers (UAW), Marchionne reiterated his long- held opposition to two-tier wages. "I always have been of the view that the two-tier wage structure is unsustainable in the long term," he said, advocating the phasing out of the older, higher tier and tying the new, lower tier to company performance through annual wage hikes. "We have to replace the (two-tier) wage struc- ture with something that reflects the sharing of the economics of running this enterprise," Mar- chionne said. "I object violently to the notion of entitlement in the wage structure. That is some- thing that is incredibly unwise." Canadian union leaders fear Marchionne's plan to eliminate the two-tier wage system in the U.S. will result in the top-tier earners losing ground to meet the bottom-tier workers in the middle. It's a proposal that could have major im- plications for Chrysler's Canadian plants as Uni- for gears up for 2016 contract talks. During the 2012 contract talks the union — then Canadian Auto Workers (CAW) — avoided two-tier wages and profit sharing. In- stead, it agreed to raise its grow-in period to 10 years from six. Unifor argues its current deal puts Canada's labour costs on par with the U.S. — particular- ly when the lower loonie is considered — but the two-tier wage system in the U.S. continues to create pressure for cost-cutting here. "What Marchionne is thinking about is not to bring the lower wage up," said Liam Ride- out, president of Unifor Local 1285 represent- ing workers at Chrysler's Brampton, Ont. as- sembly plant. "He wants them to meet in the middle. That's his idea of getting rid of two-ti- er wages. And whatever they do in the UAW is going to have an impact on us, because they're our direct competition." The company's uncertain future in Canada is contributing to the concern. In March 2014 the automaker announced its intention to withdraw all requests for financial assistance in the development of assembly plants in Wind- sor and Brampton, Ont. Chrysler still plans to develop and build its next minivan in the Windsor location, and the Brampton facility benefitted from recent in- vestments and redesigns of the Chrysler 300, Dodge Charger and Dodge Challenger it cur- rently produces — but the decision to take a step back from further investment has many in the industry worried. Mexico and the United States — both lower- cost jurisdictions — offer automakers millions of dollars in incentives, said Pete Mateja. Mateja, co-director of the Office of Auto- motive and Vehicle Research at the Univer- sity of Windsor's Odette School of Business and an assistant professor at the institution, argued the federal government must make changes to attract automotive investment. "It could be a very difficult time in Canada based on what transpires" with the UAW in 2015, he said. UAW workers in the U.S. have been with- out a wage increase for close to a decade, Mateja estimated, and a move to phase out the top-tier earning capacity could result in major labour action. "You approach anybody and ask them to take a pay cut, it's not going to go over well," he said. "Remember, these workers have not had wage increases in eight, 10 years. The companies are profitable… and you want people to take a cut? Are you out of your mind? The union would be cutting their own throats." It's not only the inequity in wages, Mateja continued, but also the difference in ben- efits, holiday time and the ability to make contributions to a defined benefit (DB) pen- sion plan. The inequity is simply unsustain- able in the long term. And while the decisions made by Chrysler and the UAW in 2015 could potentially have a significant impact on the Canadian economy, Unifor does have an advantage in coming to the table in 2016. "Canada is in a very fortunate position be- cause of the fact that the UAW is going ahead of them," Mateja said. "Unifor is in a wonder- ful position because they're going to be able to watch what happens south of the border. They also have the advantage of the U.S. economy getting stronger, so it could be a greater shift as far as the devaluation of the Canadian dol- lar against U.S. currency." This positive perspective is shared by Dias. While UAW's adopting a two-tier wage sys- tem made sense at the time given both the company and the country's dire financial situ- ation, the decision to bring its starting wage down as low as US$13 per hour kicked off a race to the bottom, something Dias said "un- dercut the entire auto sector. It was a disaster for working-class people in the United States." The elimination of the two-tier system can only benefit those workers, Dias said, and crit- ics shouldn't count Canada out just yet. "There's so much to take into account. We have a highly skilled, sophisticated, educated workforce. We have the infrastructure, we have the access to markets, we have all these won- derful things that make Canada an attractive place to do business." News Photo: Rebecca Cook (Reuters) A Chrysler employee works on the line in the company's Windsor, Ont., assembly plant. Chrysler's recent decision to withdraw requests for financial assistance in the development of its plants in Windsor and Brampton, Ont., are adding to union concerns regarding upcoming bargaining in 2016. Canadian unions in unique bargaining position < from pg. 1

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