Published On: Mon, Oct 31st, 2011

Chrysler CEO Wants to Create Single Wage Rate for Employees

Chief Executive Officer Sergio Marchionne announced Friday that he would like to create a single wage rate for all Chrysler employees represented by the United Auto Workers union at the plants. The CEOs aim is to avoid having what he refers to as “two classes” of employees.

“It creates the kind of environment that… doesn’t appear to work in the same direction that we’ve been trying to use to establish the new basis of Chrysler,” Marchionne told reporters and analysts on a call to discuss third-quarter earnings that were released Thursday.

The split wage system was agreed on by the UAW and has been in place since 2007. The system originally sought to help the Detroit automakers lower their labor costs and compete more effectively against foreign automakers such as Toyota Motor Co.

Within the two tier wage system, new hires receive starting wages that are slightly more than half those of a veteran worker. While, about 13 percent of Chrysler’s 26,000 UAW-represented workers are getting entry-level wages, reports Reuters.

“The whole notion of trying to get this organization to work in unison when you’ve got this kind of economic disparity between the people on the line is not something that can go on forever,” Marchionne said during the conference call.

Chrylers’s labor costs average $51 an hour per worker, which is competitive with those at foreign automakers.

Chrysler was the last of the three Detroit Automakers to reach an agreement with the UAW.

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