Chrysler, CAW Agree on Tentative Labor Deal

The Canadian Auto Workers union has reached a tentative four-year agreement with Chrysler that follows the blueprint laid out last week in contracts with Ford and General Motors.

Chrysler insisted it needed a less costly deal than those offered by its rivals. But the only apparent difference is that the company did not promise new investment or jobs in Canada. Ford and GM pledged to add 600 and 900 jobs, respectively.

Like their compatriots at Ford and GM, CAW workers at Chrysler will exchange a wage freeze for a C$3,000 ($3,070) ratification bonus and a C$2,000 cost-of-living lump sum in each of the next three years.

The company can pay new hires 60% of the wage earned by veteran workers compared with 70% previously. Pay for new workers will phase up to the full wage over 10 years instead of the current six years.

The Detroit carmakers began negotiations by saying that Canadian labor costs are the highest in the world and must shrink to U.S. levels. Analysts say that didn't happen, in part because the companies can hire new hourly workers in America at about 50% of the full wage. The CAW estimates that Canadian hourly wages will be roughly $7-$9 higher than those in the U.S. under the new contract.

The CAW succeeded in its two chief goals: barring a permanent two-tier wage system and avoiding a shift to profit sharing from fixed cost-of-living increases. But the bonuses the Canadian union negotiated are likely to be considerably lower than the profit-sharing payments American autoworkers will receive, analysts estimate.

Ford's Canadian workers ratified their contract last weekend and GM employees will finish voting on Thursday.