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Marchionne Wants to Eliminate 2-Tier Wage Structure at Chrysler

“Economic disparity…cannot go on indefinitely.”

by on Oct.28, 2011

CEO Sergio Marchionne is signalling Chrysler must find a way to eliminate the 2-tier union wage structure.

Despite the significant cost savings it is bringing to the smallest of the domestic automakers, Chrysler CEO Sergio Marchionne signaled that the maker’s two-tier wage structure is something he plans to eliminate in the not-too-distant future.

About one in eight of Chrysler’s 26,000 union workers in the U.S. currently fall into the second tier, earning about half as much as more senior members of the United Auto Workers Union – a figure expected to grow to at least one in four by the time the newly ratified 4-year UAW contract expires in 2015, said Marchionne during a conference call.

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The union failed to eliminate the two-tier structure during its recent contract talks with Chrysler, General Motors and Ford, though it did win so-called “new hires” a modest increase of about $3 an hour in wages and some additional benefits.  But in an unexpected turn, Marchionne suggested that having multiple grades is “structurally undesirable.”