Chrysler Ready to End Two-Tier Wages

Fiat Chrysler Automobiles CEO Sergio Marchionne says he wants to end the company's two-tier wage system for U.S. hourly workers, Bloomberg News reports.

Marchionne made the assertion at a conference in Washington, D.C., on Wednesday.

"We've got to get rid of this dichotomy," he declared. He called the current two-tier wage structure, which pays new employees less to do the same work performed by senior workers, "the wrong answer" because it creates two classes of employees on the factory floor, according to Bloomberg.

The United Auto Workers union agreed to accept a two-tier structure, which pays beginning workers $15.78 per hour and veteran workers $28 per hour, to help domestic carmakers recover from the industry's collapse in 2008.

But the union also has made it clear from the beginning that it considers the system inherently unfair and wants to abolish it in next year's round of new labor contracts with General Motors, Ford and Chrysler.

Marchionne concurs. He proposes a variable pay structure that would index worker pay to company performance. He says he would support a plan that enables veteran workers to retain their current pay level. He also cautions the UAW not to seek new entitlements that ignore fluctuations in company earnings.