Treasury tweaks wage wording in auto loan terms

WASHINGTON (Reuters) - The U.S. Treasury on Friday altered the wording of loan terms for Detroit automakers to seek reductions in wages and benefits to levels "competitive with" Japanese rivals.

Under wording released earlier in the day, the Treasury said it would require reductions to levels "equal to" average compensation paid per hour and employee by Toyota Motor Corp , Nissan Motor Co and Honda Motor Corp in the United States.

The change, described as a correction of a grammatical error by a Treasury spokeswoman, followed protests from the United Auto Workers union, which vowed to work with the Obama administration to remove loan rules it deemed "unfair."

UAW President Ron Gettelfinger said in a statement that the terms contained "unfair conditions singling out workers."

The automakers have said their hourly wages are similar to those paid at Japanese "transplants" -- around $28 per hour. But the U.S. automakers have commitments to retiree health care pensions and other obligations that take their average hourly labor cost above $70, compared with near $47 for Toyota.

Under a new labor contract, General Motors Corp, Ford Motor Co and Chrysler LLC can hire new workers at wages as low as $14 per hour and shift retiree health care costs to a trust fund aligned with the union from 2010.

The Treasury terms for $4 billion in loans to Chrysler and up to $13.4 billion in loans to GM also contain the following targets for the companies:

-- Eliminate any compensation to employees that have been "fired, laid off, furloughed or idled, other than 'customary severance pay.'" This would effectively eliminate the "jobs bank," under which idled UAW workers continue to receive pay and benefits under a jobs protection program.

-- Apply work rules to U.S. employees by December 31, 2009 that are competitive with Toyota, Nissan and Honda in the United States.

-- Reduce outstanding public indebtedness by two-thirds by debt-for-equity swaps or other appropriate means

-- Ensure that at least half of the future value paid into a union-run employee benefit account be made in the form of company stock.

GM and Chrysler are required to submit progress reports on these goals to a presidential designee, or "car czar," by March 31, 2009. The designee will determine their compliance, but has room to consider explanations from the companies if they do not meet the targets, according to Treasury officials.

President-elect Barack Obama also has the latitude to change some terms of the loan agreements after he takes office on January 20, 2009, the officials said.

(Reporting by David Lawder; Editing by Dan Grebler)